- Margin increase thesis relies on food and energy prices going down soon. I've got no clue. Also need consumer spending to stay high. I suspect some are still in the delayed pent up demand spending and cost pressures will continue to reduce demand gradually maybe? In short just not confident in this.
- Poor management - makes me think the thesis of selling off pubs / concessions is not very likely. At least I wonder how proactive they will actually be. Time frame at the least is very unknown.
- Rebuffing Activist investors board seat request with statement on undergoing strategic review - is this lip service? It's certainly reactive and not proactive - showing poor management again.
Those 3 are enough for me to think it could get worse before it gets better... So a pass for me. Will keep an eye on it though.
Much less relevantly I was a big fan of Wagamama's but last couple of times I've been I've found it expensive versus alternatives. And food was just less good than I remembered. And service much worse than pre-pandemic. My go to for Asian chain restaurant is now Pho. I still like Wagamama's but don't love it anymore, and I / my family are definitely their target audience.
Hope that's somewhat helpful... sorry it's not super positive from me.
Hey thanks so much for the kind words and for the comments, they are much appreciated.
On the margin side, I think cost pressures will start to ease at some point, but hard to say exactly when. I think given the quality of WG and their pubs, they should be able to fare better if demand weakens. But demand for restaurants tends to be more resilient than a lot of other consumer categories during a downturn. And importantly, footfall still remains below 2019 levels.
Management is not great, I do agree on that point. Hopefully the activists can exert some pressure here.
Hi Clark,
Great writeup. Very clearly laid out.
Feedback / my thoughts on the idea:
- Margin increase thesis relies on food and energy prices going down soon. I've got no clue. Also need consumer spending to stay high. I suspect some are still in the delayed pent up demand spending and cost pressures will continue to reduce demand gradually maybe? In short just not confident in this.
- Poor management - makes me think the thesis of selling off pubs / concessions is not very likely. At least I wonder how proactive they will actually be. Time frame at the least is very unknown.
- Rebuffing Activist investors board seat request with statement on undergoing strategic review - is this lip service? It's certainly reactive and not proactive - showing poor management again.
Those 3 are enough for me to think it could get worse before it gets better... So a pass for me. Will keep an eye on it though.
Much less relevantly I was a big fan of Wagamama's but last couple of times I've been I've found it expensive versus alternatives. And food was just less good than I remembered. And service much worse than pre-pandemic. My go to for Asian chain restaurant is now Pho. I still like Wagamama's but don't love it anymore, and I / my family are definitely their target audience.
Hope that's somewhat helpful... sorry it's not super positive from me.
Looking forward to your next writeup!
Hey thanks so much for the kind words and for the comments, they are much appreciated.
On the margin side, I think cost pressures will start to ease at some point, but hard to say exactly when. I think given the quality of WG and their pubs, they should be able to fare better if demand weakens. But demand for restaurants tends to be more resilient than a lot of other consumer categories during a downturn. And importantly, footfall still remains below 2019 levels.
Management is not great, I do agree on that point. Hopefully the activists can exert some pressure here.
Also, thanks for the color on your WG experience.
Only found this business last year after they acquired Barburrito, a competitor to a company I own. Thanks for the write up!
Thank you for the comments!
I like the fact they are selling pubs, first thing I thought when I read that is "pubs are a terrible business in the UK".