The Restaurant Group (TRG) has agreed to sell off its leisure business, comprising of 75 trading sites and associated restaurant and management team employees, to the Big Table Group.

As part of the deal, which is expected to complete early in Q4 2023, TRG will pay a cash contribution of £7.5m to the Big Table Group.

TRG has approximately 380 restaurants and pub restaurants throughout the UK, with its principal trading brands including Wagamama and Brunning & Price.

The board of TRG has decided that selling its loss-making leisure business will significantly accelerate the group’s core strategic goals of adjusted EBITDA margin accretion and deleveraging. EBITDA, or earnings before interest, taxes, depreciation, and amortization is calculated by adding interest, tax, depreciation, and amortization expenses to net income, as a measure of corporate profitability.

Prior to the pandemic, TRG’s leisure business comprised 350 sites but over the last three years, the group has reduced its exposure to what it has described a “challenged” segment of the market, by undergoing significant restructuring resulting in a remaining trading portfolio of 75 sites – which are those to be acquired by the Big Table Group.

TRG CEO, Andy Hornby, commented: “A sale of our leisure business significantly accelerates our medium-term strategic plans to increase adjusted EBITDA 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.”

The subject of the transaction is 75 trading sites and associated central costs and teams required to run those sites – principally comprising of the brands Frankie & Benny’s and Chiquito. The acquiring group is Baltra Bidco, a newly incorporated company wholly owned by the Big Table Group, which is an independent operator of restaurants in the UK owned by private equity firm, Epiris.

The consideration payable by the acquiror to the Group on completion of the sale is just £1. In addition, TRG will pay a cash contribution of £7.5m, subject to certain cash, debt and working capital adjustments, and there will likely be a minor working capital outflow for TRG in the 2023 financial year-end.

As part of a service agreement, TRG will also provide certain customary services at cost to Big Table Group for a limited period to ensure an orderly operational transition for the 75 sites. This transition is expected to be completed by the end of Q1 2024.

CEO of the Big Table Group, Alan Morgan, added: “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.”

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