Seagrass Boutique Hospitality is suddenly far more profitable, despite weak consumer confidence and softer revenue, after its new Japanese owner wiped the steakhouse group’s debt. The operator behind African-inspired Meat & Wine Co restaurants booked $16.4 million profit in the nine months to March 31 compared with $2.9 million for the 12 months to June 29 last year.
Those are the first reported results since Japanese food services giant Colowide took control in May last year and overhauled Seagrass’ finances. Profit is surging even though one quarter of trading is still to be reported.
Colowide’s acquisition deal did more than change the share register. It reset Seagrass’ balance sheet by eliminating its net debt through a capital increase.
The debt wipe pulled interest costs off the profit and loss, giving the hospitality group more breathing room as diners tighten discretionary spending. Latest accounts lodged with the corporate regulator show revenue of just under $181 million for the nine months compared with $211 million in the prior full year.
Seagrass has also shifted its financial year-end to March 31 to line up with Colowide’s reporting calendar.
Leaner financing costs are doing heavy lifting for earnings, even as top-line sales trail the last full year’s result on an annualised basis. Nine months of revenue at just under $181 million implies a slower run rate than the $211 million previously recorded, but operational leverage and a cleaner balance sheet are pushing margins higher.
Investors and lenders often watch this kind of debt wipe closely, seeing it as a fast way to stabilise restaurant operators exposed to cyclical consumer spending. Seagrass is now positioned to focus on trading performance in its final quarter rather than managing legacy borrowings.
