Caffe Nero seeks rescue deal due to second coronavirus lockdown
Caffe Nero has launched a restructuring plan to reduce costs due to the impact of the coronavirus pandemic on the coffee chain’s branches in city centre and transport hub locations.
The high street cafe chain has appointed KPMG to advise on a Company Voluntary Arrangement following the introduction of a second coronavirus lockdown.
Morning Wire understands the company is seeking to move the majority of its 800 UK stores to a turnover based rent.
Chief executive Gerry Ford, who founded the business in 1997, said the second lockdown meant it was “imperative that we take further action” and it had “little option…to safeguard the future of our business,”
“Prior to Covid-19, the business had been trading strongly, and had achieved 83 consecutive quarters of sales growth,” Ford said.
“However, like so many businesses in the hospitality sector, the pandemic has decimated trading, and although we had made significant progress in navigating the financial challenges of the first lockdown, the second lockdown has made it imperative that we take further action.
“I am grateful for the support of our business partners, suppliers and landlords, as we address our fixed cost base so we can continue to protect jobs, which has been our focus since March.”
Will Wright, head of regional restructuring at KPMG, said: “Like many others across the sector, the impact of measures introduced in response to the Covid-19 pandemic has been devastating.
“In putting forward this CVA proposal, the directors have worked hard to strike a fair compromise with stakeholders to provide the flexibility the business urgently needs to get it through the pandemic.”
Clive Chalkley, partner at law firm Gowling WLG, said the decision is a “sensible one”, that could help preserve the business.
“The way in which Caffe Nero has attempted to adjust during the pandemic is to be applauded – where customer and employee needs are concerned,” he said.
“However, the ongoing macroeconomic situation makes this decision a sensible one, that will hopefully help preserve this longstanding brand, whether that be under new ownership, or in the same hands.
“It is noted though that Landlords again will be called upon to take the first economic hit during this pandemic.”