The Restaurant Group, owner of the Frankie & Benny’s and Wagamama chains, plans to close 35 of its worst-performing sites, as it comes under pressure from activist investors.

It has also announced a new three-year plan to increase operating margins from 8.3 per cent to 11.8 per cent, but chief executive Andy Hornby told the Financial Times the move “really isn’t” a concession to Oasis Management, a Hong Kong hedge fund that owns a 6.5 per cent stake.

TRG has clashed with Oasis in recent weeks, after the fund’s request for a board seat was rejected. People close to Oasis said the fund had also suggested TRG could offload its Brunning & Price pub chain for a valuation of £250mn, and would push for Hornby to leave if he failed to improve performance.

A second activist fund, Irenic Capital Management, also built a position in TRG last year and has been in contact with the company. Irenic has not filed a disclosure yet, indicating it holds less than 3 per cent of voting rights in the company. TRG management will meet Oasis in the coming days.

Shares in the London-listed group fell 15 per cent to 38p during early afternoon trading, after it denied speculation that it would announce an immediate asset sale. But Hornby did not rule out changing tack, saying: “No CEO is ever going to say an asset isn’t for sale, but clearly . . . the only logic of selling it will be if it is worth massively more to somebody else, and they’re prepared to pay for it.”

Hornby stressed that he was not unnerved by the pressure from the activist funds. “I’m nerved by making sure I run the business properly . . . If I don’t deliver on some of these promises that I’ve laid out, I will have an issue.”

The presence of Irenic on the shareholder register adds to pressure on TRG. The New York-based firm has previously been active in situations including the proposed merger between Rupert Murdoch’s News Corp and Fox businesses.

“I genuinely am comfortable taking input from all shareholders,” said Hornby. He added that there was “no doubt” that the “broad shareholder base” was supportive of his strategy.

TRG’s share price had risen 30 per cent since mid-February when Oasis went public with its views, before sliding on Wednesday. Hornby said he was “not giving credit” to the activist investors for the stock’s improving performance.

Instead, he argued the improvement was because investors anticipated “promising” full-year earnings despite signs that customers were cutting spending at TRG’s cheaper restaurants.

TRG said VAT-adjusted like-for-like sales in the eight weeks to the end of February rose 16 per cent in Wagamama restaurants, 14 per cent in its pubs division and 2 per cent at its leisure venues.

Most closures will fall on the Frankie & Benny’s and Chiquito chains, and will happen over the next two years as leases run out. Hornby said this would help TRG bring down its £185mn debt pile, which has been costly to service.

Total sales at TRG last year increased nearly 39 per cent year-on-year to £883mn, with adjusted earnings before interest, tax, depreciation and amortisation edging up from £81.2mn in 2021 to £83mn last year. But TRG posted a statutory pre-tax loss following a non-cash impairment charge “due to significant inflationary and cost-of-living pressures in the near term”, the company said.


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