Frankie and Benny’s and Wagamama owner will permanently close 125 sites as it battles with landlords to reduce rents in wake of Covid crisis
The owner of Frankie and Benny’s has confirmed plans to close 125 sites across the country, potentially putting thousands of jobs at risk.
The Restaurant Group (TRG) said it had been on the ‘sharp end of the Covid-19 pandemic’ and it would try to slash what it pays in rents.
The firm is entering into a company voluntary arrangement with its landlords to restructure its estate by closing around 125 restaurants, and trying to get better deals from landlords on the rest.
The company, which counts the Wagamama and Garfunkel’s brands among its 650 restaurants and pubs, plans not to reopen dozens of outlets after the lockdown ends, putting up to 3,000 jobs at risk.
The Restaurant Group, which owns Frankie and Benny’s, has confirmed plans to close 125 of its sites as it tries to push down rents after the huge hit to the hospitality sector from coronavirus
A TRG spokesman had said they were in discussions with landlords about ‘potential restructuring options for our leisure estate’.
The warning came as the boss of Mexican restaurant chain Wahaca said starting up again after the lockdown is ‘going to be hell’ for the restaurant industry.
‘A lot of people are going to be nervous about coming out,’ said Mark Selby, chief executive and co-founder of Wahaca. ‘We’ve all got to do our jobs in making people feel confident, making them feel safe, but also giving them that experience that hospitality is.’
TRG stressed that the restaurant sector is ‘facing exceptional challenges’ due to the lockdown, and was ‘already facing significant challenges prior to the onset of Covid-19’.
In March, it shut 60 of its Chiquito Mexican-style outlets, as well as its Food & Fuel chain of pubs, after placing them into administration.
The company, which counts the Wagamama and Garfunkel’s brands among its 650 restaurants and pubs, plans not to reopen the outlets after the lockdown ends, putting up to 3,000 jobs at risk
The company, which has about 22,000 staff on furlough, is one of Britain’s largest restaurant operators.
But analysts at Citi said it would benefit from selling its whole leisure business, saying that it comprises nearly half of the group’s sites but is likely to account for only 20 per cent of profits in the 2021 financial year.
The brokerage said: ‘A clean exit would leave the group focused on its growth businesses, which we think have stronger prospects and would command a higher multiple.’
Most of Wahaca’s 1,000 employees have also been furloughed, but Selby called on the Government to go further to protect jobs and firms that will continue to struggle even after the lockdown ends.
‘I can guarantee for the next six to eight months, with sales where we expect them to be, we are going to need serious rent concessions.’