Wagamama’s restaurant kitchens are currently twice as profitable as delivery kitchens – but delivery sites offer a much higher return on the capital required to set them up.
The pan-Asian casual dining chain has a track record of delivering over 40% returns on invested capital and approximately £500,000 average outlet EBITDA from its UK restaurants.
Delivery kitchens, on the other hand, generate £225,000 average outlet EBITDA with over 75% return on invested capital.
It is important to note that there are some caveats to this comparison. The restaurant numbers are based on new openings between 2015 and 2017, while the delivery kitchen figures are based on the five sites that it currently operates.
Wagamama is targeting expansion of both channels in the UK with a “measured” long-term roll-out plan.
It is aiming to widen its restaurant portfolio from 144 sites today to between 180 and 200 in future, while opening between 20 and 30 delivery kitchens.
Wagamama is the only UK pan-Asian brand concept of scale, with no large direct competitor, and benefits from being aligned to a number of consumer trends, including the focus on healthy options, speedy service and convenience through delivery.
Its obsession with fresh food and superior levels of engagement amongst team members are critical points of differentiation, with the cuisine also travelling extremely well for delivery and takeaway.
Parent company, The Restaurant Group, currently has no sites able to trade for dine-in, but has been operating delivery and click-and-collect services across approximately 200 sites in its Wagamama and Leisure businesses.
Average weekly delivery and takeaway sales for Wagamama during February were two-and-a-half times higher than they were pre-Covid.
After recently opening its fifth delivery kitchen site in Balham, London, executive chef Steve Mangleshot explained why it’s so important for the design to match the anticipated volume of business.
“The worst thing you can do is design a kitchen for delivery that ends up being too small because then it’s actually not fit for purpose,” he said. “We keep very close to it and it’s just about being mindful of what we’re putting on our menu. We need to make sure that whatever we offer for delivery, it turns up to your house, looks fantastic and tastes absolutely superb.”