10th Jun 2020 10:17
(Alliance News) - Restaurant Group PLC on Wednesday confirmed plans to shutter 125 restaurants and seek rent reductions on a further 85 in its Leisure estate via a company voluntary arrangement.
On Monday, Restaurant Group had said it was in talks with its landlords over potential restructuring options amid "exceptional challenges" and "unprecedented operating environment".
Last week, it was reported that a "large number" of Frankie & Benny's outlets would remain closed after lockdown. The BBC said a staff email was sent to managers in the group's Leisure division, saying many sites are "no longer viable to trade and will remain closed permanently".
In March, Restaurant Group was forced to shut a majority of its Chiquito Mexican-style outlets, as well as its Food & Fuel chain of pubs in London, after these fell into administration.
On Wednesday, the company said the CVA will relate to The Restaurant Group UK Ltd, which comprises mainly Frankie & Benny's outlets as well as some Chiquito sites and other Leisure brands. The arrangements will have no impact on Wagamama, Airport Concessions and Pub operations, the company noted.
A "comprehensive" review of the Leisure estate portfolio has identified 210 trading sites that are either underperforming, on unfavourable lease terms or not expected to generate future profitable returns. Of these, 125 have been selected for closure in the short-term, with the balance of 85 sites to seek a reduction in rental costs and revised lease terms.
It also will allow the company to exit about 25 restaurants which have already been closed.
There are around 65 Leisure sites which will be unaffected by the CVA.
"The issues facing our sector are well documented, and we have already taken decisive action to improve our liquidity, reduce our cost base and downsize our operations. 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," said Chief Executive Andy Hornby.
The company said the proposals reflect its approach to ensuring a long-term sustainable business for all stakeholders in the face of unprecedented disruption to the UK's casual dining sector.
The British Property Federation said it had been talking to The Restaurant Group before it proposed the CVA, but it would be up to individual landlords to decide how to vote on the deal.
The federation's chief executive Melanie Leech said: "These situations are never easy, particularly now for the retail and hospitality businesses on our high streets at the sharp end of the Covid-19 pandemic.
"Property owners, however, need to take into consideration the impact on their investors, including the millions of people whose savings and pensions are invested in commercial property, as they vote on any CVA proposal."
Restaurant Group shares were trading 3.5% lower in London on Wednesday at 68.10 pence each. The stock was above 166p at the start of 2020.
By Evelina Grecenko; [email protected]
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