Is the UK’s chain restaurant sector broken?
There was a time, not that long ago, when you could blink and it felt like another new branch of the hippest restaurant had opened up.
Whether it was the latin fusion of Las Iguanas, the chic Parisian-inspired bistro cafe aesthetic of Cafe Rouge or the general bonhomie of Bella Italia – you could find an eaterie to match your own specific vibe pretty much anywhere in the country.
Once the pandemic lockdown eases, we could very well see the same situation in reverse.
The Casual Dining Group – which owns all of the above chains – has already filed notice to appoint administrators for the various brands which employ over 6,000 workers between them.
Options could range from administration to a Company Voluntary Administration (CVA) which would see rent reductions for some sites, other sites closed and a proportion of debt written off.
It would also provide legal protection from creditors including any landlords that wanted to bring statutory demands to force payment.
Alternatively liquidation could be an option which would see some of the brands, including lesser known ones such as Belgo and Huxley Bar & Kitchen, disappear from the high street completely.
A spokesperson for the Casual Dining Group said: “As is widely acknowledged, this is an unprecedented situation for our industry and, like many other companies across the UK, the directors of Casual Dining Group are working closely with our advisers as we consider our next steps.
“The notifications (of appointment) are a prudent measure in light of the company’s position and the wider situation.”
The Restaurant Group, who own chains such as Frankie and Benny’s, Garfunkels and Wagamama who were also looking at reducing their food footprint across the country have announced a CVA today.
125 of their sites will close with the potential loss of 3,000 jobs as a result. They will also look to improve the rental terms on a further 85 restaurants leaving 65 unaffected by the CVA.
This is in addition to their 81 tex-mex themed Chiquitos restaurant which went into administration in March along with 11 Food and Fuel branded locations in London.
The chief executive of The Restaurant Group, Andy Hornby, thanked employees for their understanding and commitment, saying: “The proposed CVA will deliver an appropriately sized estate for our leisure business to ensure we are well positioned despite the very challenging market conditions facing the casual dining sector.”
The travails of Jamie Oliver, The Handmade Burger Company and Chilango over the previous 12 months already indicated a sector that was overstretched and underperforming for the sheer number of outlets it comprised.
Coronavirus might have helped them make some difficult decisions quicker
Businesses start to struggle and flounder when things become overly complicated for them.
Whether it’s supply chains, invoicing, remittance or customer service – the more layers and complexity that is added means it’s harder for the company to do what it was formed for – most likely the simplest premise of supplying a product.
Covid-19 has cut through the unnecessary fog and given businesses a hard mirror to look into and reduced all other considerations into one – can they survive? If they – what options exist to take so it can survive?
Nobody asked for a pandemic or a lockdown but it happened and how your company responds could define its future.
Even if you’re confident about being able to put food on the table, whether at a chain restaurant or at home, it would still pay to talk to an expert about what changes need to be made to meet the challenges that lie ahead.
Getting in touch with us is simple – as is arranging a convenient free, virtual consultation with one of our experienced, expert team.
Once we’ve had that initial conversation, we can start to pull plans together based on where you want your business to go so that as soon as you’re able to reopen your doors to customers – you’ll know exactly what you have to do next.