David Lammy 4pm - 7pm
Wagamama owner braces for food costs to soar by 10%
24 May 2022, 09:14
Higher energy and fuel costs are pushing up the cost of food and drink.
The owner of restaurant chains Wagamama and Frankie & Benny’s has warned its annual food costs are set to jump by up to 10% this year as it battles soaring inflation.
The Restaurant Group (TRG) said it was braced for food and drink costs to rise by around 9% to 10% over its full-year, up sharply from around 5% at the time of its full-year results in March.
The group said it continues to work with supply chain partners to offset some of the higher costs but cautioned it “remains a volatile inflationary market”, with price pressures compounded by the war in Ukraine.
Ingredient prices have rocketed, with higher energy and fuel costs all pushing up the cost of food and drink.
But TRG said strong trading across its Wagamama and pubs businesses was helping mitigate soaring inflation, with like-for-like sales up 11% and 6% respectively versus 2019 pre-pandemic levels in the six weeks so far of its second quarter.
This is lower than the 18% and 12% sales growth respectively seen in the first quarter, when the temporary reduction in VAT helped flatter sales figures.
TRG said brands in its leisure arm matched wider market growth, with sales up 4% in the six weeks to May 15.
Its concessions sites have been slower to recover but it said the bounce-back was accelerating, with the decline in sales narrowing to 11% in the most recent six weeks from 26% in the first quarter.
TRG now expects sales from the division to reach at least £100 million in 2021-22, with all 41 sites in the arm trading once again by July.
TRG is set to open at least eight new Wagamama restaurants and three delivery kitchens over its full-year, while three new pubs are in the pipeline.
“The continued strength of trading of these businesses has reinforced our belief in their long-term roll-out potential,” the group said.