(Reuters) - Boparan Restaurant Group (BRG) plans to close more than a third of its Giraffe and Ed’s Easy Diner outlets in an attempt to secure the future of the two British chains, BRG and its advisers said on Monday.
The company plans to close 27 of the 70 sites owned by subsidiary Giraffe Concepts and reduce the rent on a further 13 restaurants, said Will Wright, a partner at business consultants KPMG, which will supervise attempts to strike a deal - called a Company Voluntary Arrangement (CVA) - with creditors.
The CVA will put 340 jobs at risk out of the 1,300 people employed by the two chains, a source with knowledge of the matter told Reuters, adding 20 Giraffe outlets and seven Ed’s Easy Diner stores would close.
The move is the latest blow for a British casual dining sector suffering from subdued consumer spending, an excess of outlets and competition from online food delivery services.
“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,” Wright said.
Sky News earlier reported details of the closures. In emailed replies to Reuters’ questions, neither KPMG nor BRG Chief Executive Officer Tom Crowley gave details on job losses.
Crowley said BRG had been examining options for the two chains for some time and that the CVA, which allows a business to avoid insolvency by offloading unwanted stores and securing reduced rents on others, was the “only option”.
BRG, backed by restaurant tycoon Ranjit Boparan, also owns the 2 Sisters Food Group, one of Britain’s biggest food manufacturers, and Harry Ramsden fish and chip shops.
Giraffe Concepts needs to get approval from at least 75 percent of its creditors for the CVA to go ahead.
A vote will be held on March 21. If it passes, Boparan and banks will inject about 10 million pounds ($13 million) into the business, the source said.
BRG bought Giraffe from Tesco Plc in 2016, before combining it with Ed’s Easy Diner the same year. The two brands have a retail partnership agreement with the supermarket giant.
More than 1,000 restaurants went bust in Britain in the year through September 2018, up 24 percent on the previous 12 months, accountants Moore Stephens said here in December.
Chains such as Carluccio’s, Prezzo, Jamie’s Italian, Strada and Gourmet Burger Kitchen closed outlets in 2018.
Reporting by Noor Zainab Hussain and Sangameswaran S in Bengaluru; Editing by Patrick Graham and Mark Potter