The Restaurant Group, which owns Frankie and Benny’s and Wagamama'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.
Most of the site closures will affect Frankie & Benny’s restaurants and up to 3,000 jobs are on the line. The Restaurant Group also owns pan-Asian chain Wagamama, and runs several pubs and concessions in airports. These will not be affected.
The site closures a part of the company's CVA plans, an insolvency process typically used by hospitality operators and retailers to dispose of loss-making outlets and to reduce rents.
The Restaurant Group said it was seeking approval from its landlords for a deal that would let it reduce the number of restaurants it runs, and negotiate lower rents for many of those left over.
Bosses said the hospitality industry was facing “well documented” problems, after the coronavirus pandemic forced many in the sector to close their doors.
If landlords approve the deal it will leave the firm’s leisure arm with about 160 sites.
Andy Hornby, Chief Executive said: "The issues facing our sector are well documented and we have already taken decisive action to improve our liquidity, reduce our cost base and downsize our operations.
"The proposed CVA will deliver an appropriately-sized estate for our Leisure business to ensure we are well positioned despite the very challenging market conditions facing the casual dining sector."
The Restaurant Group told investors last week it was struggling even before the coronavirus hit.
In March, before lockdown, the firm closed 60 of its Chiquito Mexican-style outlets, as well as its chain of pubs Food & Fuel.
After press reports that the group was planning sweeping closures, analysts at Citi said the move would be good for the business.
It would benefit from getting rid of the whole leisure business, they said, which is expected to account for only 20% of its profits this financial year despite encompassing nearly half of its restaurants.
Citi said: “A clean exit would leave the group focused on its growth businesses, which we think have stronger prospects.”
The Restaurant Group said that 210 of its 285 restaurants had been identified as underperforming, on “unfavourable” lease terms, or not expected to generate profit in the future.
