Creditors of the Jamie Oliver Restaurant Group will vote today on proposals for a Company Voluntary Arrangement, which is likely to see at least 12 restaurants close across the estate.
Under the terms of the proposed Company Voluntary Arrangement (CVA), which is being handled by AlixPartners, the group has agreed to close restaurants in: Bath, Bristol, Bluewater, Chelmsford, Greenwich, Harrogate, Kingston, Milton Keynes, Piccadilly Diner, Reading, St Albans and Threadneedle St.
The company is also seeking a 30% cut in the rent at eight further marginal sites.
The CVA document, seen by MCA, claims that under-investment in its estate, especially older restaurants, while investing in unsuitable or costly newer locations, were two of the main reasons for the restructure.
In the document,. the company said it faced new and increased competition from new entrants to the casual dining sector and the roll-out of established offerings. It also highlighted that food costs and complexity to the menu had negatively impacted operating overheads and external factors like the national minimum wage increases combined to make the trading environment extremely challenging.
Additionally, certain exceptional costs were incurred which worsened the financial condition of the business (e.g. the aborted Fish and Coal project in London and a committed site which was not opened in Southampton).
Prior to the current financial year the new Jamie’s Italian management team led by Jon Knight carried out a review of head office costs and reduced headcount by 19. Additionally previous management made a decision to close six restaurants through consensual negotiation with landlords.
New menu trials are currently live in three restaurants and this is expected to be rolled out to the full estate in February. Linked to this is a management initiative to reduce complexity within the kitchen / food preparation areas, which will lower ingredient costs and reduce direct labour costs.
Furthermore, a comprehensive review of overhead contracts and procedures has been undertaken and significant savings are expected to be driven from the operational improvements that this review has implemented.
