A major fast food chain has confirmed it will shut a number of restaurants and cut jobs after appointing administrators,
Leon, which operates around 70 locations across the UK, is set to shut sites after struggling to navigate the fallout of the Covid-19 pandemic and the cost of living crisis.
Last week, the chain’s co-founder John Vincent confirmed he was in discussions with property owners about the future of loss-making restaurants after recently buying back the business he helped establish.
Overall, Leon has around 70 restaurants in Britain, as well as 29 franchise locations at transport hubs and airports, and currently employs around 1,120 people.
Leon has confirmed restaurant closures
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GETTYToday, Leon applied for an administration order “for the purpose of formulating proposals for a Company Voluntary Arrangement (CVA) to help accelerate the restructuring of the business”.
In a statement, the firm asserted that “the immediate priority is to reduce the number of loss-making restaurants” for Mr Vincent and his team. The businessman reacquired Leon in October of this year after it was purchased by the Issa brothers, who also own Asda, for £100million in 2021.
According to the business, “changing work patterns, brought on by the Covid-19 pandemic, and also tax increases” have played a factor in Leon’s current financial standing.
Leon claimed these factors “combined placed further strain on the business and the wider hospitality industry in recent years” in another blow to Britain’s wider economy.
High street store and restaurant closures are on the rise
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PAOver the last financial year, sales slipped 3.7 per cent to £62.5million while it losses narrowed from £19.6million to £8.4million. Notably, the company cited high electricity costs as a huge contributor to its hiked expenditure.
The business’ statement added: “Although he believes that the company drifted from its values under the ownership of EG and Asda, Mr Vincent has been sympathetic to the challenges they had as owners.”
Reacting to Leon falling into administration, Mr Vincent said: “In the last two years, Asda had bigger fish to fry, and Leon was always a business they didn’t feel fitted their strategy.
“If you look at the performance of Leon’s peers, you will see that everyone is facing challenges – companies are reporting significant losses due to working patterns and increasingly unsustainable taxes.”
As part of the administration process, Leon is set to “spend the next few weeks discussing the plans with its landlords” alongside advisors Quantuma “and lay out options for the future of the company”.
The administration statement shared: “Leon then plans to emerge from administration as a leaner business that can return to its founding values and principles more easily. In the meantime all the group’s restaurants remain open serving customers as usual.”
It should be noted that Leon’s grocery business will not be affected by the CVA with the exact numbers of restaurants closing and job cuts still be confirmed.
The restaurant chain added: “In the first instance, we will look to find people roles in other Leon restaurants. Where that is not possible, for example if there is no Leon restaurant within commuting distance, people will receive redundancy payments.”