Hundreds of jobs are at risk after Boparan Restaurant Group confirmed plans to shut one-third of its restaurants through a Company Voluntary Arrangement (CVA).
The Birmingham-based group, which operates a number of casual dining brands including Harry Ramsden’s, is part of the same Boparan family of business that includes 2 Sisters Food Group. If the CVA is approved, its parent company led by Ranjit Boparan will inject £10m into the business.
Although Harry Ramsden’s is unaffected, its Giraffe and Ed’s Easy Diner chains will see significant closures – with 27 of the 87 restaurants planned to shut.
It is expected that 20 Giraffe and seven Ed’s Easy Diner sites have been earmarked for closure, while the group is seeking rent reductions at a further 13 sites. However the 17 sites which are operated as franchises are unaffected by the proposed CVA.
The plans would result in around 340 of the 1,300-strong workforce losing their jobs.
The brands were acquired by Boparan in June and October 2016 respectively.
Tom Crowley, chief executive of BRG, said: “We have been examining options for the two brands for some time and the CVA is the only option to protect the company.
“The combination of increasing costs and over-supply of restaurants in the sector and a softening of consumer demand have all contributed to the challenges both these brands face.”
The two brands are operated by a Boparan group company, Giraffe Concepts. Its most recent accounts, published in October for 2017, showed a pre-tax loss of £9.9m on sales of £67.1m.
Ed’s Easy Diner has regional sites in Birmingham at Grand Central, Arena Birmingham and in Selfridges, while Giraffe operates in Grand Central and Birmingham Airport.
Will Wright, restructuring partner at KPMG, said: “This CVA seeks to address the cost of the company’s leasehold obligations across a number of unprofitable sites, and if successful, will put the business on a surer financial footing.”
The CVA proposal will be voted on by creditors on March 21 and will require 75% approval for it to happen.
The casual dining sector has been under pressure for the last couple of years through a combination of weaker consumer confidence, rising costs, and the impact of fast expansion of the sector.
Burger brands Byron, Gourmet Burger Kitchen and Handmade Burger Company have all shuts sites or restructured, while Giraffe’s competitor chains including Jamie’s Italian, Prezzo and Strada have also downsized.
Source: The Business Desk