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Wagamama owner warns of ‘significant disruption’ from COVID-19
The owner of Wagamama has warned that its cash-burn during the second national lockdown was more than a third higher than the first due to rent agreements and furlough payments.
The Restaurant Group (RTN.L) said that almost two-thirds of its sites will either close or only serve takeaways as coronavirus restrictions continue to eat into the leisure and hospitality sector.
The company said it will shut 103 of its sites and provide delivery and takeaway services from another 142 due to the latest UK government tiering restrictions, which come into effect on 19 December. This leaves just 145 sites that will trade for dine-in across the UK.
The Restaurant Group said restrictions were "significantly worse" than when initially introduced in October and it expects "significant disruption" to trading while the measures remain.
“Clearly the mix of locations impacted across the tiers will continue to evolve, but if UK tiering allocations were to remain the same as currently in place throughout the first quarter of 2021, this will have a significant adverse impact on the group, and indeed the wider hospitality sector," the group said.
TRG said it is encouraged by the welcome news of the COVID-19 vaccine being rolled out in the first half of next year and added that it is well-positioned to benefit from the easing of restrictions.
Shares fell more than 4% on the back of the news.
The pound tumbled against the dollar (GBPUSD=X) and the euro (GBPEUR=X) on Friday, falling from a two-year high as the EU’s chief negotiator Michel Barnier said the UK and the EU have “just a few hours” to work out an agreement.
Speaking in the European Parliament in Brussels, Barnier said it was "the moment of truth" for the two sides to come to an agreement.
He said there was still a "chance" of a deal, but the "path is very narrow".
Watch: EU's Michel Barnier says 'just a few hours' remain to strike trade deal
It came as UK prime minister Boris Johnson and European Commission President Ursula von der Leyen resumed talks on Thursday night to try bridge the differences between the two sides.
Although Britain left the EU on 31 January, it will fully leave the bloc on 31 December 2020.
London and Brussels missed their 13 December deadline to reach a Brexit trade deal but agreed to continue negotiations, setting a new deadline of Sunday 20 December.
UK retail sales went into reverse in November for the first time in six months, as lockdown restrictions forced the closure of many stores.
Sales dropped 3.8% between October and November, according to the latest Office for National Statistics (ONS) data published on Friday.
Howard Archer, chief economic advisor to the EY Item Club, said the decline was “relatively modest” given the heavy curbs in place and showed a “resilient” picture for much of the sector.
Strict coronavirus restrictions were in place for much of the UK in parts of November, including an enforced shutdown of ‘non-essential’ retail in England for most of the month.
Michael Hewson, chief market analyst at CMC Markets UK, noted ahead of the figures that lockdowns had been expected to bring sales to a “shuddering halt.” Analysts had predicted a decline of 4% or more month-on-month, so the fall was less severe than feared.
Sales were still above pre-pandemic levels despite the monthly decline, and online sales made up a greater share than the previous month at 31.4% of total retail.
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Additional reporting by Tom Belger