Gourmet Burger Kitchen is to close 17 of its 85 restaurants with the potential loss of 250 jobs in the latest sign of tough trading conditions on Britain’s high streets.
The upmarket burger chain has asked landlords and other creditors to support a company voluntary arrangement (CVA) restructuring plan as it admitted it was struggling in a “challenging UK casual dining environment” and said its rental payments were too high.
Derrian Nadauld, the firm’s managing director, said: “We are having to take tough but necessary actions to reduce our fixed-cost base and restore long-term profitability.”
The chain is owned by South Africa’s Famous Brands, which also owns the Wimpy franchise in the UK. It is the latest in a series of casual dining restaurant groups to close outlets through a CVA as consumer spending slows and the cost of wages and business rates rise. Overexpansion by formulaic groups backed by private equity has also increased competition just as diners have reined in spending.
The rival chain Byron closed 20 of its 67 sites through a CVA while Jamie’s Italian, Carluccio’s and Cau, part of the Gaucho group, have all used the process to shut outlets and cut hundreds of jobs this year.
Matthew Richards, a director at Grant Thornton, which is advising on the Gourmet Burger Kitchen CVA, said: “The casual dining trading environment in the UK remains extremely challenging, driven by a change in dining behaviour, long-term consumer trends and increased competition.
“It is important to stress that no restaurants will close immediately and employees and suppliers will continue to be paid on time and in full.”
The chain said it had already taken significant steps toward restructuring the way the business operated, including reducing head office costs, the refurbishment of 30 restaurants and updating its branding.
Source: The Guardian