Leon to close sites and cut jobs as it enters administration
Fast-food chain Leon is set to enter administration, close a number of locations and cut jobs as part of a bid by its new owner to turn around the struggling chain.
The company was bought back by co-founder John Vincent last month from Asda in a deal reported to be between £30m and £50m, well below the £100m that billionaire brothers Mohsin and Zuber Issa paid for Leon in 2021.
It has now been confirmed that Leon has 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 company said that for Vincent and his team, “the immediate priority is to reduce the number of loss-making restaurants”.
Leon blamed its struggles on “changing work patterns, brought on by the Covid-19 pandemic, and also tax increases” which have “combined to place further strain on the business and the wider hospitality industry in recent years”.
The business added: “Although he believes that the company drifted from its values under the ownership of EG and Asda, Vincent has been sympathetic to the challenges they had as owners.”
Leon strikes deal with Pret A Manger
John 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.”
Leon is now expected to “spend the next few weeks discussing the plans with its landlords” alongside advisors Quantuma “and laying out options for the future of the company”.
A statement added: “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.”
The business confirmed that the Leon grocery business will not be affected by the CVA.
The exact numbers of locations to be closed and jobs to be cut have not been confirmed.
Leon said: “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.
“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.”
Leon owner blames ‘unsustainable tax burden’
Also included in the statement was a call from Vincent for a review of what he sees as an unsustainable tax burden on the sector.
He said: “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.
“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.”
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.”
The business was founded in 2004 by John Vincent, Henry Dimbleby and Allegra McEvedy.
It currently has 71 restaurants, operates 44 owned sites and has 22 franchised locations.
In September, before Leon was sold by Asda, Morning Wire reported that Leon had axed hundreds of jobs as it bemoaned a “challenging” year in which it wrestled with high cost inflation and depressed customer spending.
The fast-food chain cut its headcount by 17 per cent, or 224, to 1,120 over 2024, its latest accounts show, as it sought to bear down on heavy losses.
The firm posted a 3.9 per cent downturn in sales to £62.5m, alongside losses of £8.4m, a significant reduction on the £12.5m loss it reported the previous year.