Gourmet Burger Kitchen plans to close a raft of outlets while it battles insolvency
The company said its Irish stores are safe.
UK-BASED RESTAURANT chain Gourmet Burger Kitchen (GBK) could close up to 17 outlets after entering restructuring negotiations with its creditors.
The company’s South African parent, Famous Brands, issued a statement to the Johannesburg Stock Exchange saying that the board of GBK has initiated a ‘company voluntary arrangement’ with the assistance of professional services firm Grant Thornton.
Famous Brands explained that the process is unique to the UK and is “used by financially distressed businesses in order to come to a binding agreement or compromise with their unsecured creditors”.
“Whilst this process evolves, shareholders will be updated when appropriate and are requested to continue to exercise caution in the trading of Famous Brands shares,” it told investors. A creditors meeting will be held on 9 November.
Under the terms of the company voluntary arrangement, or CVA, the burger chain has earmarked 17 restaurants for potential closure, which will impact up to 250 staff.
“Every effort will be made to redeploy staff from restaurants should they close. The other 68 restaurants will continue to trade as normal,” the company said.
In response to a query from Fora, a spokeswoman for GBK said the move will not affect its Irish operations.
“This arrangement is with landlords of our UK restaurants and has no impact on the separate GBK legal trading entity in Ireland,” she said.
Challenges
GBK managing director Derrian Nadauld said the decision to enter the CVA process was primarily to do with challenges in the UK.
“Given the challenging UK casual dining environment and over-rented UK restaurant estate, we are having to take tough but necessary actions to reduce our fixed cost base and restore long-term profitability,” he said.
Grant Thornton director Matthew Richard said that “no restaurants will close immediately and employees and suppliers will continue to be paid on time and in full”.
In Ireland, GBK operates five outlets across Dublin. It also previously operated a restaurant in Newbridge, Co Kildare, which is now closed.
According to its most recent accounts, Gourmet Burger Kitchen (Ireland) Limited reported a loss of €749,000 for the year to 25 February 2018. This is compared to 2017′s loss of €210,000.
Its revenues increased for the period, from €3.2 million to €4.9 million.
Note: This article was updated to include additional comment from Gourmet Burger Kitchen about its Irish operations.
