Brunning & Price disposal advice from TRG backer

By Gary Lloyd

- Last updated on GMT

Vote revealed: Irenic Capital Management has stated it will vote against The Restaurant Group's renumeration policy (credit: Getty/Klaus Vedfelt)
Vote revealed: Irenic Capital Management has stated it will vote against The Restaurant Group's renumeration policy (credit: Getty/Klaus Vedfelt)

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Brunning & Price, and other “non-core assets”, should be “disposed” so its owner, The Restaurant Group, can concentrate on running Wagamama, according to shareholder Irenic Capital Management.

Irenic, which claims to be a “substantial shareholder” of The Restaurant Group announced it intends to vote against TRG’s “renumeration policy”.

There was speculation about The Restaurant Group potentially looking to offload Brunning & Price​, which operates about 80 pubs across England and Wales, in March, but a few days later The Restaurant Group reported its Pubs division had outperformed rivals​ in its annual trading update for the 52 weeks ended 1 January 2023.

At the time it stated it was set to put 35 sites in its leisure division on the market, which includes Frankie & Benny’s, Chiquito, Coast to Coast, Filling Station and Firejacks.

Vote against policy

A statement from Irenic today (Thursday 27 April) read: “Irenic intends to vote against the remuneration policy. We have already communicated this privately to non-executive chairman Ken Hanna and chief executive officer Andy Hornby.

“In place of the current compensation scheme, we have suggested the board adopt a new plan that more closely links compensation to shareholder returns.

“We believe Mr Hornby is capable of unlocking the substantial value that exists at The Restaurant Group. But, unfortunately, the current remuneration plan provides little incentive to do so. In fact, it does the opposite.

“Under the current remuneration plan, the only direct financial incentive for Mr Hornby is to increase overall profits at the enterprise – irrespective of the capital employed to do so. This encourages ill-advised acquisitions (Barburrito) and provides a disincentive to make the hard but necessary decision to sell non-core assets – and use the proceeds to de-lever.”

Focus on Wagamama only

It contiued: “Ultimately, The Restaurant Group should own just Wagamama and focus its efforts on growing that business. We have urged Mr Hanna and the board to design a remuneration policy that encourages Mr Hornby to get to this end-state as quickly as possible. Should the remuneration committee adopt such a policy in the future, we would support it.

“The path forward at The Restaurant Group should be clear. Dispose non-core assets, de-lever and grow Wagamama – a brand that has excellent unit economics and a substantial global runway.

“Performance of The Restaurant Group’s non-core assets has rebounded from the depths of Covid-19 and financing markets are open. There is no reason for further delay in an asset sale program. It is time to get on with it.”

Irenic Capital Management is a New York City-based investment management firm founded by Adam Katz and Andy Dodge.

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