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Gourmet Burger Kitchen is just the latest restaurant chain to hire restructuring advisers and is reported to be looking into new rent agreements and restaurant closures, which could result in a Company Voluntary Arrangement (CVA) being proposed to it’s creditors.
The South African-owned firm, which closed its Wilmslow branch in 2013, is the latest chain to suffer in the casual dining slump.
Rising costs and stiff competition has already lead to Prezzo, Carluccio’s, Byron Burgers and Jamie’s Italian seeking CVA deals.
These agreements allow operators to close unprofitable sites. It is also an opportunity for companies to negotiate cheaper rents.
A CVA document, which must be agreed by 75% of a business’s creditors, spells out how a business will rectify its financial position, including setting out a plan to repay debts.
Gourmet Burger Kitchen has more than 100 sites, including restaurants in the Trafford Centre and Bolton.
Three New Zealanders opened the first site in London in 2001. It pursued a strategy of aggressive growth as it opened restaurants across the country, including sites in Wilmslow and Spinningfields in 2007.
Gourmet Burger Kitchen was acquired by the Clapham House Group of restaurants in 2004 before it was sold to the Yellowwoods Group in 2010. Famous Brands, a South African company bought the burger chain for £120 million two years ago.
A statement from Famous Brands last month said: “Difficult trading conditions persisted across all our markets during the review period, with common features including intensified competitor activity and margin pressure in the context of economic hardship.”
The owners also reported that operating losses had tripled to £2.24 million in the 22 weeks to 29 July 2018, compared to the previous year. Like for like sales fell 10.6%, compared to a 2.6% decline in 2017.
Umbrella Insolvency’s Licensed Insolvency Practitioner Tom Fox said: “Gourmet Burger Kitchen saw a gap in the market when they first opened. But the casual burger market has been squeezed by the likes of Byron Burger and Five Guys, which have expanded rapidly in recent years.
“The company hasn’t announced any closures yet, but it is a real possibility considering what’s happened to other struggling chains.”
For professional help and advice with business debt, speak to a member of the Umbrella.uk team today. Call: 0800 611 8888.