The owner of the Giraffe and Ed’s Easy Diner chains is planning to close 27 restaurants, putting hundreds of jobs at risk.
Boparan Restaurant Group (BRG) said on Monday it intended to enter a company voluntary arrangement (CVA), an insolvency procedure that can include cutting property costs by seeking store closures or a reduced rental bill.
The two brands run 87 restaurants, although none of the potential closures will affect the 17 outlets run by franchisees, including those in airports. Like-for-like sales have improved significantly but the performance at a number of sites has remained unprofitable across both businesses, BRG said.
BRG acquired Giraffe from Tesco in the summer of 2016 in a deal valued at about £13m. The company paid almost £10m to acquire 30 Ed’s Easy Diner sites in the same year after the business fell into administration.
The companies were then combined into BRG-owned Giraffe Concepts Ltd, which generated revenues of £67.1m in 2017 but made a loss of £9.9m, according to its latest company accounts.
Tom Crowley, the chief executive of BRG, said: “We have been examining options for the two brands for some time and the CVA is the only option to protect the company. The combination of increasing costs and over-supply of restaurants in the sector and a softening of consumer demand have all contributed to the challenges both these brands face.”
Crowley added that the company has negotiated a refinancing package with lenders if its creditors agree to the CVA.
BRG is owned by Boparan Holdings, the parent company of 2 Sisters Food Group, the country’s largest supplier of supermarket chicken. The ultimate owners are Ranjit Singh Boparan, known as the “chicken king” and his wife, Baljinder Kaur Boparan. Their £3bn food empire also includes the turkey producer Bernard Matthews, as well as Fox’s biscuits and Goodfella’s pizza. Last year 2 Sisters was found guilty of regulatory failures and poor hygiene at its poultry plants in a report by the Food Standards Agency, following an investigation by the Guardian and ITV News.
BRG’s other restaurant chains – fish restaurant Harry Ramsden, US-themed brand Slim Chickens and FishWorks – are not affected by the proposed closures.
KPMG is advising on the CVA, after being appointed earlier this month to review options for the business.
The British casual dining sector has struggled in the past two years, amid pressure on consumer spending. Other restaurant chains that have closed branches in recent months include Jamie’s Italian, Strada, Byron, Gaucho and Prezzo.