The Restaurant Group (TRG) has agreed to sell its loss-making Frankie & Benny’s and Chiquito brands to Café Rouge owner Big Table Group, as it looks to support margins and slash debt.
TRG, which owns Wagamama, said it would pay £7.5million to private equity-backed Big Table Group as part of the deal, which includes 75 sites and restaurants.
Big Table Group will pay TRG a nominal value of £1.
TRG has struggled with financial losses over the past year.
Frankie & Benny's will be sold to Big Table Group as part of the deal
PA
It was announced last week that Chairman Ken Hanna would step down, following months of pressure from activist investors to change management and improve profitability.
The company said: "The Board is continuing to actively explore its strategic options to further accelerate margin accretion and deleveraging."
TRG said it will focus on three divisions - Wagamama, Pubs and Concessions - following the move.
Stifel analysts welcomed the decision, stating: "We ...believe that divesting the Concessions business could be a neat way to assuage debt concerns without diluting the quality of group earnings.”
TRG has shut around 40 of its sites over the past year following weaker trade.
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.”
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Chiquito will be sold to Big Table Group
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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.”
Big Table owns Café Rouge, Las Iguanas and Bella Italia.