wagamama

The UK’s leading pan-Asian casual restaurant chain

wagamama provides pan-Asian inspired cuisine in a minimalist, modern environment. The success of the differentiated proposition – freshly prepared/ cooked, good quality and affordable food – has enabled wagamama to grow into a nationally recognised brand, with the potential to expand further internationally.

Origination and execution

The company was bought outside an auction process and is Duke Street’s second major acquisition in 2011, following the eleven major transactions made since December 2009. The team had three months of de facto exclusivity in which to carry out due diligence.

The price paid for wagamama was higher than the average 5x multiple paid for Duke Street’s previous five platform deals. This is in line with market multiples (8 to 10x) commanded by premium consumer assets and reflects wagamama’s significant growth prospects.

In order to secure investment, particularly given the quality of competing assets in the Duke Street deal pipeline, it was necessary for wagamama to demonstrate that it had significant growth/return potential.

Specifically, Duke Street was excited by the opportunity to:

• back a proven and operationally strong management team and drive the business harder by appointing Operating Partners Martin Robinson and David Williams to the board;
• benefit from an attractive economic model delivering high margins, high profit density and cash conversion of over 90%;
• benefit from strong market dynamics, i.e. the casual dining market growing at 12% CAGR 2006 to 2009;
• invest in a differentiated proposition with a strong national brand and scope to more than double the current 70 restaurants in the UK, as well as significant likely upside from international expansion.

Management

wagamama’s management team is led by Chief Executive Steve Hill, who has been with the business since 2006. The team will remain with the business as significant shareholders and will work closely with Duke Street to drive the roll-out strategy both in the UK and internationally.

The acquisition was led at Duke Street by John Harper, supported by Gemma Farrell. Duke Street Operating Partner Martin Robinson, former CEO and current chairman of Center Parcs initially chaired the board. In late 2011, Operating Partner David Williams took over the chairman role from Martin.