So, Luke Johnson has bought Wahaca after the 14-site Mexican restaurant chain appointed advisers to find a new, deep-pocketed owner that could help it regain its status as a truly national casual dining group.
For Johnson, the deal marks something of a return to the sector that helped define his career. Johnson expanded Pizza Express in the 1990s, famously turning it from a business with a dozen sites into a 250-site behemoth in less than 10 years, and was also a custodian of London restaurants The Ivy, Le Caprice and J Sheekey until he sold them to a certain Richard Caring. Other business interests include Giraffe, of which he was a part owner, Belgo, and Strada, which he founded in 2000 and took to 30 restaurants before selling it.
Yet in recent years his hospitality investments have been focused on other parts of the hospitality market: bakeries, speciality coffee, competitive socialising and pubs (and brewing), with brands including Gail’s and Patisserie Valerie. This begs the question, why return to casual dining now? Could it be that after several bruising years traditional casual dining has become undervalued?
Johnson is known as a canny investor, and if he is prepared to back a full-service restaurant chain at a time when many investors continue to favour simpler, lower-cost operating models, it is a strong sign that he believes the sector is nearing a turning point. It also signals his belief that Wahaca, a brand that once had an estate of almost 30 sites and was a star of the Mexican scene, has more in the tank.
The green shoots of Wahaca’s revitalisation are already there to see. The group, founded by Mark Selby and Thomasina Miers and led by managing director Gemma Glasson, recently returned to expansion after spending several years rebuilding following the pandemic.
The opening of its Paddington restaurant last year ended a six-year hiatus in new openings and signalled that the business was ready to grow again after its 2020 restructuring. It has since appointed property advisers to identify opportunities in cities including Cambridge, Manchester, Glasgow and Birmingham, alongside further sites in London.
Despite operating restaurants in Cardiff and Edinburgh, Wahaca remains heavily concentrated in the capital, where 11 of its 14 sites are located. That leaves considerable headroom for regional expansion, including the opportunity to return to cities such as Manchester, Liverpool and Bristol, where it previously traded before its pandemic-era restructuring.
As Johnson says: “Wahaca is a brand I’ve long admired – brilliant food, real culture, and a team that’s clearly hit its stride. I’m looking forward to working closely with Gemma and the team to build on the momentum they’ve created.”
Johnson is known as a canny investor, and if he is prepared to back a full-service restaurant chain at a time when many investors continue to favour simpler, lower-cost operating models, it is a strong sign that he believes the sector is nearing a turning point
Wahaca played a pivotal role in changing perceptions of Mexican food in Britain, introducing many diners to a more authentic regional take on the cuisine at a time when the market was largely dominated by Americanised Tex-Mex. The space has evolved considerably since then, with fast-casual burrito chains, independent taquerias and premium operators such as El Pastor all broadening consumers’ understanding of Mexican food.
Yet the brand arguably still occupies a distinctive and relevant position within the market it helped create. It remains one of the UK’s best-known Mexican restaurant brands and, with the right financial backing, appears well placed to accelerate its next phase of growth.
The timing may also be favourable. Demand for Mexican food remains strong – research from by DesignMyNight in June found a 261% year-on-year growth in searches for tacos - while the continuing rise of tequila and mezcal has also helped. At the same time, the property market is arguably more attractive than it was five years ago, with landlords more willing to negotiate and a growing number of quality sites available.
That does not mean expansion will be straightforward. Unlike bakery chains or grab-and-go concepts, Wahaca is an operationally demanding business that requires relatively large sites, sizeable kitchen and front-of-house teams, and a menu that is difficult to centralise without compromising quality. Scaling the business therefore demands significantly more capital and operational expertise than many of the hospitality concepts currently attracting investor interest.
Yet perhaps that is precisely what makes Johnson’s interest in Wahaca so significant. At a time when many investors remain cautious about full-service restaurants, backing a business such as Wahaca represents a vote of confidence not just in one established brand, but in the long-term prospects of the casual dining sector itself.