Leon has appointed administrators as new owner John Vincent kicks off turnaround efforts to get the fast food chain back in shape and to close loss-making restaurants.
The food-to-go brand has appointed advisory firm Quantuma as administrators to “lay out options for the future of the company”. The restructuring will involve the closure of several Leon restaurants and a number of job losses.
“In the first instance, we will look to find people roles in other Leon restaurants,” said Vincent. “Where that is not possible, for example if there is no Leon restaurant within commuting distance, people will receive redundancy payments.
“In addition we have established a programme with Pret a Manger where affected Leon employees can apply for jobs via a dedicated channel. I would like to thank the Pret CEO Pano Christou for supporting us and our team at this important time.”
Under the current plan, Leon will exit administration early next year following a Company Voluntary Arrangement – a legal agreement between Leon and its creditors that will allow it to pay off a proportion of debts over an agreed period. It plans to emerge 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 as usual. The Leon grocery business will not be affected by the CVA.
Quantuma said: “We are looking forward to working with the Leon team to deliver the optimal outcome for all stakeholders of the business, the creditors, suppliers and employees of the company.
“Leon is obviously a much-loved and cherished member of the retail food community, as we have already had very positive support from its supplier base and many of its landlords.”
A challenging environment
Last month, Vincent bought Leon back from Asda after he sold the business to EG Group in 2021. It marks the third time Vincent has led the premium fast food chain.
While Vincent believes Leon drifted away from its values under EG and Asda ownership, he has admitted that in the past 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.”
Vincent is now calling for a review of what he sees as an ”unsustainable tax burden on the sector”.
“Today for every pound we receive from the customer, around 36p goes to the government in tax, and about 2p ends up in the hands of the company. It’s why most players are reporting big losses,” he said.
“The immediate priority is to close the most unprofitable restaurants. In many cases we have found other brands to replace us, and in others we will be asking the landlords to take the leases back and find better suited operators themselves.
“We will rebuild Leon on its core values and I hope to be providing jobs to many more people once we have returned to profitability and can continue to grow again.”
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