Leon serves up restructuring deal to slash rents after pandemic hit
Healthy fast food chain Leon has launched a restructuring deal which aims to slash its rents after it was impacted by closures during the pandemic and severely depressed footfall.
The chain, which was founded by John Vincent and Boris Johnson’s “food tsar” Henry Dimbleby, has circulated proposals for a Company Voluntary Arrangement (CVA).
The plans, which will require the green light from creditors, will see four of Leon’s sites move to a rent-free model while a large number of sites will have turnover-based rents.
Leon, which operates 75 sites globally, said the restructuring comes as it continues to suffer from “severely reduced footfall numbers” following the second national lockdown in England.
It said it expects revenues to continue to be weighed down by local tiered restrictions which have started today.
The company is one of a number of chains, including Pret a Manger and Caffe Nero, to be hit by a significant fall in the number of city centre workers.
Caffe Nero passed its own CVA plan on Tuesday, while other food chains such as Pizza Hut, Wasabi and Wahaca have also used the restructuring method since the start of the pandemic.
John Vincent, founder and chief executive officer of Leon, said: “The CVA is intended to provide the company with a foundation to first survive and then carefully rebuild.
“We had a growing and profitable business before Covid.
“Despite taking many actions to reduce cost and optimise revenue during the crisis, the continued lockdowns and restrictions have made this CVA a necessity.”
Leon stressed that the CVA will not impact staffing levels and will preserve the majority of its current store estate.
Andrew Andronikou, managing director at Quantuma, said: “The retail and casual dining sector has suffered significant damage throughout the Covid-19 pandemic, the ongoing uncertainties still need to be addressed.
“While the plans for a UK vaccination programme are promising, the fact remains that a return to normal may still be some way off, and this uncertainty continues to have significant consequences to businesses reliant on footfall and a return to normal working practices.
“Our number one priority, as we work with the board of Leon over the coming weeks and months, will be to allow the business to navigate the current challenges and help the business return to its positive trajectory whilst protecting jobs and minimising the need for store closures.”