TRG to sell Frankie and Benny's and Chiquito to rival Big Table

TRG said it will pay £7.5m in cash to Big Table, which owns Cafe Rouge, Las Iguanas and Bella Italia, for it to buy the loss-making business.

The business comprises of around 75 restaurants, after TRG had shut around 40 of its sites over the past year in the face of weaker trade.

It comes after months of pressure from activist investors at Wagamama owner TRG for it to offload parts of its business in an effort to boost profitability.

The investors, led by activist fund manager Oasis Management, called for TRG to reassess its growth plans and also pushed for the departure of the company's chairman Ken Hanna, who announced he was leaving last week. The deal, which is expected to complete in the final quarter of 2023, will allow TRG to focus on its Wagamama, pubs and concessions divisions.

TRG said it is "continuing to actively explore its strategic options" to improve its profits.

Andy Hornby, chief executive officer of The Restaurant Group, said: "A sale of our leisure business significantly accelerates our medium-term strategic plans to increase adjusted Ebitda (earnings before interest, tax, depreciation and amortisation) margins and reduce leverage.

"On behalf of TRG, I would like to express our massive thanks to the extraordinarily hardworking and dedicated teams across the leisure business who have made huge improvements in the customer proposition over the last few years.

"We wish them all well as part of the Big Table Group."

Alan Morgan, chief executive officer of the Big Table Group, said: "Creating, developing and acquiring brands that complement our existing portfolio whilst offering widespread consumer appeal is a fundamental part of our growth strategy.

"This exciting acquisition forms part of that strategy and we are delighted to be welcoming this new team into The Big Table Group."

AJ Bell investment director Russ Mould added: “Paying a third party to take two brands off its hands shows how The Restaurant Group was desperate to get its finances in shape and remove the shackles which have weighed it down for years.

"The group has gone for the nuclear option – jettisoning the brands from its portfolio, albeit at a cost of £7.5m to The Restaurant Group.“The group will be left with Wagamama, a chain of posh pub restaurants and various concessions in airports. All of these have brighter earnings prospects and give The Restaurant Group a better footing with which to pay down debt and a platform for stronger financial growth in the future.”