Norovirus outbreak wrecks Wahaca’s profits but chain insists business has recovered

Mexican restaurant chain Wahaca claims to have “recovered” from the aftermath of the norovirus outbreak that temporarily closed nine of its stores 18 months ago even though it has emerged that the incident severely damaged its profitability.

Accounts published by parent company Oaxaca Limited this month reveal that exceptional costs of £731,000 recorded in its balance sheet for the year to 25 June 2017 were “predominately” as a result of the October 2016 event.

The business tumbled to pre-tax losses of £4.7m for the period, compared with a profit of £640,000 the year before. Gross profit margin slipped to 39.9% compared with 44.5% the year before.

Despite the decline of its bottom line, the chain, which runs nearly 30 restaurants, succeeded in maintaining turnover. Sales for the year reached £46.6m versus £46.4m the year previously.

In the strategic report accompanying the results, the directors stated: “The results of the variances to the same period last year were impacted predominately as a result of a one-off event in October [2016] that forced us to shut a number of our sites on a temporary basis. While this had a significant impact on our trading performance for the financial year relative to the previous year the business has managed to recover from the aftermath of the event.”

Looking ahead to future developments, they added: “The group plans to develop growth through the opening of new sites as well as continually driving performance on the existing estate.”

The accounts show that Wahaca received an insurance payout of £286,000 during the period.

Wahaca was forced to contact officials at Public Health England and Environmental Health Offices when it emerged that number of its stores might be at the heart of a norovirus outbreak in October 2016.

Co-founders Mark Selby and Thomasina Miers took the step of issuing a joint statement at the time apologising for the incident after staff and customers went down ill.

“We are incredibly sorry that people have been unwell. In the nine years since we first opened Wahaca we have never had such an unprecedented incident, and we are doing everything we can to get to the bottom of how this may have happened,” they said at the time.

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