Byron faces crunch vote on restructuring plans


The fate of stricken burger chain Byron will be decided next week when creditors vote on a proposed restructuring package which could spark hundreds of job losses.

Byron has tabled a company voluntary arrangement (CVA) in an attempt to shore up its financial position by allowing it to close loss-making restaurants and secure deep discounts on rental costs.

Around 20 restaurants could be closed as part of the process, as Byron's owners attempt to stave off its decline in the casual dining sector.

If the CVA is to succeed, the burger chain's plans would need 75% backing from creditors, which include landlords, during a vote on Wednesday.

Mark Edwards, BDO partner and head of restaurants and bars, said Byron has been forced to re-trench because its expansion was too hasty.

He said: "When restaurant groups (such as Byron) go and expand very quickly, there is always a risk some of those sites will be marginal sites.

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"However, the sector as a whole is struggling. There are some operators that are more successful than others such as Honest Burger, which has a different take and is London-centric.

"My personal view is that when you look at the UK's eating habits, there are fewer visits to eat out over the last few months, but not cooking at home is embedded in British culture and I don't see that changing.

"People are maybe not eating out as often, but when they do, they tend to spend a bit more."

As part of the sale process linked to the Byron's restructuring, investment house Three Hills Capital Partners would become the biggest shareholder by snapping up half of Hutton Collins' stake.

Professional services giant KPMG, which is handling the CVA, has moved to reassure staff that no restaurants would close on day one of the process and employees, suppliers and business rates would continue to be paid on time and in full.

The CVA has proposed that 51 Byron sites would keep their rental costs the same, and five would have their rents reduced by a third.

A further 20 would have their rents cut by 45% for six months while the group holds crunch talks with landlords over the future of these sites.

Mr Edwards said the casual dining sector was suffering from mounting cost pressures driven by the National Living Wage, the apprenticeship levy, inflation's squeeze on consumer spending and higher import costs linked to the Brexit-hit pound.

He added: "Without doubt, over the next six months the accounts [of restaurants in the casual dining sector] will show more impairments and write down of assets, leading to a sale, CVA, or some tough negotiations with landlords.

"There will be site closures because there are so many of these marginal sites that it's hard to negotiate offloading them without a serious process like a CVA."

Jamie's Italian, the eponymous restaurant chain founded by celebrity chef Jamie Oliver, announced earlier this month that it was seeking a CVA to help put the company on firmer financial ground.

Toys R Us UK successfully staved off the threat of administration in December when creditors backed its CVA plans, which triggered the loss of 800 jobs and the closure of 26 loss-making stores.