Activities

This fast-growing chain of Japanese noodle bars was founded by restaurateur Alan Yau, who left the company in 1997 to found other London restaurants such as Hakkasan, Busaba Eathai and Yauatcha. Wagamama is now owned by private equity firm, Lion Capital, investment manager Hutton Collins and the Wagamama management. It has expanded abroad with the help of franchise partners into Ireland, the Netherlands, Australia, Dubai, Belgium, New Zealand, Turkey and Denmark.

Timeline

• 1992: Founder Alan Yau opens the first Wagamama noodle bar in Streatham Street, central London
• April 1998: Yau sells the two-strong chain to venture capitalist Foreign and Colonial Ventures (now called Graphite Capital Management), which raises its stake from 33% to 64%, and to Virgin’s McCarthy Corporation, which takes a 30% share. Wagamama management holds the remaining 6%.
• December 1998: The first overseas outlet is opened in Dublin by franchisee Captain America’s Cookhouse. This is followed by expansion into the Netherlands in December 2000, Australia in May 2002, Dubai in June 2004 and both New Zealand and Belgium in early 2005.
• October 2000: Manchester becomes the site of Wagamama’s first UK restaurant outside London.
• February 2004: The company reveals that it is considering a £50m flotation on the Alternative Investment Market in June to raise cash for expansion. Graphite Capital now owns 60% of the company, while the management has a 13% share.
• June 2004: The flotation is put on hold as the group discusses a potential £50m-£60m takeover with several venture capital firms. However, talks with Hutton Collins and Apax Partners terminate in July and August respectively.
• September 2004: Investment group Hutton Collins injects £17m into Wagamama in return for a 15% stake in the company, while the management’s shareholding rises to 15%.
• June 2005: Graphite Capital sells its majority stake in Wagamama to private equity firm Lion Capital for £102.5m but retains a minority interest.

Financial snapshot

Full year 

Turnover: £32.5m (2003: £25.3m)
Pre-tax profit: £3.5m (2003: £2.6m)

Financial year end: 28 April 2004

Operating data

Total number of restaurants: 70

Number of UK restaurants: 46 (23 in London, plus outlets in Basingstoke, Bath, Birmingham, Brighton, Bristol, Canterbury, Croydon, Exeter, Glasgow, Guildford, Kingston-upon-Thames, Leeds, Manchester Printworks, Manchester Spinningfields, Milton Keynes, Newcastle, Norwich, Nottingham, Reading, Richmond, Solihull, St Albans, Tunbridge Wells)

Number of overseas restaurants: 24 – in Dublin, Cork, Amsterdam (three), Antwerp, Australia (12), Dubai (two), New Zealand (two), Turkey (one) and Copenhagen (one), USA (one)

Number of employees: 1,700 (excluding franchisees)

Average spend per head: £11.25

Each restaurant serves more than 125kg of noodles to over 1,000 customers each day.

Strategy

The group plans to open 12 restaurants over the next three years, and to continue to expand internally using its franchise model. Its first restaurant in the USA will open in April 2007.

Source: operations manager Jerry Marks, Caterer and Hotelkeeper, 26 August 2004

Chief executive

Steve Hill

Key directors

Commercial director: Paul O’Farrell
Operations director: Jay Travis
Finance director: Anthony Perring
People & brand director: Glyn House

Contact

Waverly House
1-12 Noel Street
London
Greater London
W1F 8GQ

Tel: 020 7009 3600
Fax: 020 7009 3601

E-mail: mail@wagamama.com
Website: http://www.wagamama.com

Commentary

Wagamama’s blend of healthy, traditional Oriental cuisine, minimalist décor, and high-tech service (waiters carry hand-held PCs to speed up orders) was genuinely innovative when it launched in 1992.

Chief executive Ian Neill (a former director at PizzaExpress) believes noodles can become as popular as pasta, and Wagamama’s rapid growth seems to bear out his confidence. The chain regularly appears in the Deloitte Indy 100 list of the UK’s fastest-growing companies and came 66th in the Sunday Times Profit Track league 2005, having enjoyed average profit increases of 53% a year  from £1.3m in 2001 to £4.6m in 2004.

The year 2004 was dominated by fund-raising issues. A flotation on the Alternative Investment Market was postponed as the group talked to a handful of potential buyers and eventually thrashed out a deal with investment group Hutton Collins that added £17m to the coffers and valued the group at £63m.

Nevertheless, Wagamama still found time to open 12 new branches in 2004 – its busiest year for openings to date.

Wagamama sees scope for 150 company-owned restaurants in total across the UK and has also considered expanding the Wagamama concept into rail and airport sites. 

The overseas drive that began in 1998 with the launch of a highly successful restaurant in Dublin will continue and 2006 will see the long-desired move into the US market. In January, the group announced plans for six Wagamamas in Boston, Massachusetts which, unlike its other international sites, will be company-owned rather than franchised. 

The group is also opening franchised outlets in Copenhagen and Istanbul during 2006.