The operator of the Wagamama and Frankie & Benny’s restaurant chains has announced plans to exit from about 35 uneconomic restaurants in its leisure division as it seeks to whittle down its least successful businesses.

The Restaurant Group (TRG) announced the move alongside a three-year plan to reduce debt and improve margins in what was widely regarded as a riposte aimed at Oasis Management Company, an activist investor with a 6.5 per cent stake.

However, the modest scale of the disposals disappointed the market, which had been hoping that the group might indicate a willingness to sell its airport concessions and Brunning & Price gastropubs. Shares in the company fell by almost 6p, or 13 per cent, to 39.5p in morning trading.

Asked whether the share price fall indicated that his plans did not go far enough, Andy Hornby, the TRG chief executive, said: “The shares are still up 15 per cent on the week and obviously there has been a lot of conjecture about whether disposals would be announced today.”

He added that the absence of a more significant strategic move on disposals did not mean the company had ruled anything out. “We are really comfortable in our organic plan but we will continue to review broader options and we will update the market as and when appropriate,” he said.

TRG, formerly known as City Centre Restaurants, entered the pandemic with about 650 sites in the UK, plus a largely franchised overseas business. It has since shed some 250 outlets for a total of about 410 at present.

Hornby, 56, who became chief executive in 2019, responded to the company’s parlous position by putting most of its Chiquito Mexican restaurants into administration and shedding 125 sites in leisure parks, mostly Frankie & Benny’s, through a company voluntary arrangement.

It also has a 20 per cent stake in a joint venture operating seven Wagamama restaurants in the US and more than 50 franchise restaurants overseas. Both units are being expanded.

Oasis, which is based in Hong Kong, broke cover last month when it accused TRG’s board of “strategic stagnation” and called on the board to “realign its priorities” and address its poor shareholder experience.

The investor, which launched an assault on Premier Foods six years ago, said that TRG had presided over “one of the worst-performing share prices of any UK leisure company” and argued it was “materially worse than its closest peers”.

Oasis claimed that TRG’s performance was disproportionately worse than that justified by sector headwinds, and that the picture was further exacerbated when the company’s three equity raises since 2018, with proceeds totalling £547 million, are taken into account.

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It said it wanted the company to engage with shareholders to “explore all options for a management change in the near term”, and subsequently mooted the idea that Hornby should step down as chief executive. It has also asked for a seat on the board, but has been rebuffed.

Earlier this week, TRG had indicated that it had spoken to the vast majority of its biggest shareholders and found no support for Oasis’s views, although last night Irenic Capital Management, which is thought to have a stake below 3 per cent, was said by Bloomberg to have held private discussions with TRG over similar issues.

Some analysts share the view that bigger disposals could crystallise greater value. Douglas Jack, at Peel Hunt, said: “If one applied a sum-of-the parts valuation, we believe it would be possible to achieve a value for the pubs that wipes out the net debt, and potentially 64p a share for Wagamama, before considering any value that is in concessions and leisure. We estimate that selling all but Wagamama and buying back shares could net a value of at least 92p a share.”

The closures mooted by TRG, to be mainly achieved via lease expiries, break clauses and disposals, will take place over the next two years, with most of the outlets being Frankie & Benny’s and Chiquito restaurants located next to cinemas and bowling lanes.

Hornby, formerly chief executive of HBOS, dismissed suggestions that the group was falling short, arguing that its Wagamama, pubs and concessions businesses were all outperforming their respective markets, performing strongly both last year and in the first few weeks of the present year.

In the year to January 1, the group lifted sales by 38.7 per cent to £883 million, helped by the benefit for its concessions business of airport reopenings, with adjusted underlying earnings up from £81.2 million to £83 million. It made an operating statutory loss of £49.7 million due to exceptional items totalling £117.5 million. These were mainly a non-cash hit from its leisure division due to “significant inflationary and cost of living pressures”.

TRG said its recent amending of its bank debt had provided £140 million of headroom, while its purchase of interest rate caps would save it about £4 million. It said it had hedged its utilities up until 2025 and food and drink cost inflation was softening thanks to short-term contracts with suppliers.

Hornby said the group had made a “very encouraging” start to the year across all its divisions, with VAT-adjusted like-for-like sales for the eight weeks to February 26 up 9 per cent at Wagamama, 14 per cent in pubs, 56 per cent at concessions and 2 per cent for leisure. He was particularly pleased at the rise in volumes of dine-in meals, suggesting that consumers were starting to go out more, although they were spending “very, very slightly less”.