Frankie and Benny's closing 125 restaurants while cutting up to 3,000 jobs
10 June 2020, 09:27
Frankie and Benny's announces the closure of 125 sites with up to 3,000 jobs at risk of being cut.
The Restaurant Group (TRG), which owns the chain and pan-Asian restaurant Wagamama, said it would reduce the number of sites it runs and that the stores would be "principally" Frankie and Benny's outlets.
It is first seeking approval from landlords to allow the firm to close the 125 sites and negotiate lower rents for those that remain open.
Bosses said the hospitality industry was facing "well documented" problems following the UK's coronavirus outbreak which forced most companies in the sector to close their doors amid historic lockdown measures.
If the company voluntary agreement (CVA) is given the green light by landlords it will mean only 160 sites will remain, while it will also be free to exit roughly 25 restaurants that have already been closed.
The Restaurant Group also owns pubs and concessions in airports which, it said, will not be affected by the closures.
"The issues facing our sector are well documented and we have already taken decisive action to improve our liquidity, reduce our cost base and downsize our operations," said chief executive Andy Hornby.
"The proposed CVA will deliver an appropriately-sized estate for our Leisure business to ensure we are well-positioned despite the very challenging market conditions facing the casual dining sector.
"I would like to wholeheartedly thank all of my TRG colleagues for their continued understanding and extraordinary commitment during this unprecedented period."
Individual landlords will be free to decide how they vote on the deal, the British Property Federation has said.
It also confirmed it had been talking to The Restaurant Group before the CVA was proposed.
The federation's chief executive Melanie Leech said: "These situations are never easy, particularly now for the retail and hospitality businesses on our high streets at the sharp end of the Covid-19 pandemic.
"Property owners, however, need to take into consideration the impact on their investors, including the millions of people whose savings and pensions are invested in commercial property, as they vote on any CVA proposal."
TRG told investors last week it was struggling even before the coronavirus pandemic.
Prior to lockdown, the firm closed 60 of its Chiquito Mexican-style outlets, as well as its chain of pubs Food & Fuel, in March.
After press reports that the group was planning sweeping closures, analysts at Citi said the move would be good for the business.
They said it would benefit from getting rid of the whole leisure business which is expected to account for only 20 per cent of its profits this financial year despite encompassing nearly half of its restaurants.
Citi said: "A clean exit would leave the group focused on its growth businesses, which we think have stronger prospects."
The Restaurant Group said that 210 of its 285 restaurants had been identified as underperforming, on "unfavourable" lease terms, or not expected to generate profit in the future.