Wagamama Plans Strategic Price Increases Amid Rising Operational Costs in 2026

Wagamama, the prominent noodle chain operating 165 restaurants across Britain, has indicated plans to implement selective price increases in 2026 as the company contends with mounting cost pressures across its operations. The casual dining group disclosed to bondholders that it anticipates labour costs and food and beverage expenses to rise by between 4 and 5 per cent next year, whilst other operational costs excluding utilities are projected to increase by 2 to 3 per cent.

The pricing strategy represents a significant shift for the pan-Asian restaurant chain, which has previously resisted major price adjustments throughout 2025. Management has prioritised value-driven initiatives, including £12 lunch promotions and the Soul Club loyalty programme, in response to declining guest numbers during the first half of the year. Customer traffic fell approximately 6 per cent in both the first and second quarters of 2025, stabilising in the third quarter before recovering with a 2 per cent increase over the eleven weeks to 14 December.

Despite these volume improvements, like-for-like sales have contracted for three consecutive quarters, underscoring the challenging market conditions facing the hospitality sector. Wagamama has announced plans to reduce operational expenditure by approximately £8 million during 2026 through efficiency measures, complementing its pricing adjustments to protect margin performance.

A company spokesman emphasised the chain’s commitment to customer value, stating that Wagamama had deliberately avoided substantial price increases whilst investing in its proposition. The spokesman noted that performance metrics exceed broader dine-in casual dining market trends, with management maintaining a focus on delivering compelling value for money during the 2026 pricing review.

The cost pressures confronting Wagamama reflect broader challenges across the UK restaurant industry, where operators face significant headwinds from government policy changes. Chancellor Rachel Reeves implemented increases to employer National Insurance contributions and minimum wage requirements in April, directly impacting labour-intensive hospitality businesses. Food manufacturers have passed through their own cost increases stemming from these tax changes, creating additional inflationary pressure on ingredient procurement.

Andy Hornby, chief executive of parent company The Restaurant Group (TRG), previously articulated the company’s cautious approach to pricing strategy. Speaking earlier in 2025, Hornby highlighted the exceptional value proposition of the £12 lunch offer including beverages, acknowledging consumer cost pressures whilst emphasising targeted actions to maintain competitive positioning.

Founded by acclaimed restaurateur Alan Yau in 1992, Wagamama has established itself as one of Britain’s most recognisable dining brands, offering pan-Asian cuisine ranging from Japanese-style chicken katsu curry to Korean-influenced bao buns. The business generated revenues exceeding £500 million in the most recent financial year, up from £464 million in 2023, though it recorded a pre-tax loss of £12.4 million according to filed accounts.

TRG acquired Wagamama in 2018 for £559 million before being taken private by US buyout firm Apollo in 2023 through a £506 million transaction. The Apollo deal followed sustained pressure from activist investors regarding operational performance and executive compensation levels. The ownership transition reflects ongoing consolidation within the UK casual dining sector as private equity firms seek value opportunities amid market disruption.

Recent menu changes have generated controversy amongst certain customer segments, particularly following the removal of several vegan dishes. Hornby defended the decision by citing customer behaviour patterns and declining demand for plant-based options, indicating that menu evolution will continue to reflect shifting consumer preferences.

The pricing actions planned for 2026 will test Wagamama’s ability to balance margin protection against volume retention in a price-sensitive market environment. Competitors across the casual dining landscape face similar cost dynamics, suggesting potential for industry-wide pricing adjustments that could moderate competitive pressure. However, consumer discretionary spending remains constrained, creating execution risk for operators pursuing price-led strategies.