Town Centre Restaurants (TCR), the operator of eateries within UK shopping centres, has undergone a pre-pack administration, with the majority of the group to re-emerge under a new vehicle led by chief executive Mark Winter, M&C Report has learnt.

The group operates 39 sites predominantly in the South East under the brands Café Giardino, Auberge and Azzuro and earlier this year appointed advisors to seek new funding options. However, no acceptable investment alternatives were forthcoming.

The pre-pack process, which was overseen by Zolfo Cooper, has led to the sale of 22 cafes and restaurants and head office facilities in Enfield to a new company, set up and funded by the existing management with the full support of its lender.

It is understood that the process has seen Gresham, the private equity group, which acquired a 70% stake in the business as part of a £48m secondary buy-out in 2006, exit the business. TCR previously completed a restructuring process in 2011.

Winter said: “We are pleased that we have been able to safe guard the bulk of the business and protect the jobs of approximately 240 people in this very difficult economic climate. We hope that through this restructuring and new investment we can take the business forward and deliver sustainable growth again in the years ahead.”

A number of units, which have been left with administrators Zolfo Cooper, will close with immediate effect with the loss of approximately 90 jobs.

The company saw its pre-tax losses narrow in the 52 weeks to 31 January 2011, from £9.3m to £5.9m, while its operating losses were reduced from £6.03m to £1.36m. Turnover dropped from £23.2m in the previous year to £21.4m, while Ebitda increased slightly from £1.41m to £1.42m.

M&C Report understands that a number of operators had already expressed an interest in some of the group’s outlets, including Gourmet Burger Kitchen and Gondola and now may look at the 16 left with the administrators.

The company commenced an estate-wide refurbishment programme last year. The first site to have been upgraded was the Café Giardino in Lakeside, with a further unit in Crawley following later in the year.

Comment by M&C Report editor Mark Wingett
Last week Union Jacks, the Jamie Oliver and Chris Bianco-led British flatbread concept, pulled out of opening at Bluewater. It is understood that two other casual dining brands are already bidding to take its place.

This encapsulates how competitive the shopping centre F&B sector has become. Well-known high street brands and up-and-coming concepts are battling for sites in these high footfall locations and in many respects TCR has been left in their wake.

In February this year, Capital Shopping Centres (CSC), which owns 14 shopping centres across the country, said that increasing demand from restaurant operators to open in malls has led to an uplift in rental income from the sector. Rent from caterers grew 25% last year after signing up companies such as Jamie’s Italian, TGI Friday and Wagamama. CSC chief executive David Fischel said: “Catering used to be a loss leader but is now a proper tenant.”

Call it the “Westfield-effect”, now even provincial shopping centres are upping their dining mix as a well-managed food and leisure offer becomes evermore fundamental to successful retail destinations. Consumers want to eat out when shopping and a solitary food court with a number of tired brands is no longer an option.