After finalising a Company Voluntary Arrangement (CVA) with creditors for Jamie’s Italian restaurant chain, the celebrity chef has now acquired one of the two existing Barbecoa steakhouses in a pre-pack deal. The formal insolvency procedure allows current business owners, shareholders, or directors to buy the best assets of the company prior to going into administration.
Upmarket London Restaurant Saved
The up-market steak restaurant Barbecoa has two outlets in desirable locations in central London: St Paul’s and Piccadilly. However, Oliver has only bought the first site out of administration for an undisclosed sum and the second is set to close just one year after it opened.
In a statement the parent company, the Jamie Oliver Restaurant Group, said that Barby Limited, the name under which Barbecoa trades, entered administration in February. New company One New Change Limited was set up on 1 February to purchase the assets and lease of the St Paul’s site.
Jamie Oliver entered into the Barbecoa venture with top New York barbecue chef and friend Adam Perry Lang and the St Paul’s site opened its doors in 2011. The TV chef backed the high-end US-style barbecue and steakhouse that focuses on rare-breed meat, dry ageing, and free-range and organic produce.
“We wanted to bring beautiful slow-cooked, dry-aged meat, amazing cocktails, great wine and probably the most outrageous desserts in London, to life,” according to the website. Food critic Jay Rayner described his dining experience as “underwhelming”.
In 2017, Oliver opened the second outlet in a large, 250-cover site in London’s Piccadilly. There were plans to open a third outlet in London’s Victoria, but due to rising costs and large increases in business rates across the two sites, the plans failed to come to fruition.
In December, Oliver personally lent the business £3m, according to the BBC, and was battling to cut costs in a bid to turnaround the ailing business. In the year to 1 January 2017, Barby Limited made a loss of £473,758, according to the most recent filed accounts.
Rescue Strategy
Jamie’s Italian restaurant chain is the group’s core business, and earlier this month, creditors gave the green light to a CVA, which will allow the troubled business to pay creditors over an agreed period to prevent the restaurant business from going under.
Turnaround and restructuring experts Alix Partners were appointed by the group to oversee the CVA, which, according to the parent company, will not affect any of the international sites.
In a statement, the restaurant group said: “We are pleased to have received the overwhelming support from our creditors for our proposal to reshape Jamie’s Italian restaurants. We have a strong brand and are focused on continuing to deliver the levels of service, taste and the experience our loyal customers deserve.”
In a response to tough trading conditions, 12 out of 37 Jamie’s Italian restaurants have been closed, including sites in Greenwich and Threadneedle Street sites. The 12 closures will affect at least 200 jobs. The group has announced that no further closures are planned and that it will “look to redeploy as many staff as possible within the wider restaurant group” and all staff will be paid fully.
Jamie’s Italian has accumulated debts of £71.5m, including a £2.2m wage bill, £30m in borrowing and £41m in rent arrears. In addition to owing debts to HMRC, suppliers and other creditors. Over half of the debt pile (£47m) is borrowing from HSBC and Jamie’s other companies. The CVA will enable Jamie’s Italian to continue to trade and implement its rescue plan.
London’s Restaurant Sector
The UK’s restaurant sector has been struggling with tough trading conditions as the high number of restaurant chain rollouts has spread custom thin. There are too many destinations for consumers to choose from, say analysts, and restaurant chains are competing against each other as well as other forms of entertainment.
Inflation is also outpacing wage growth, which has played its part in consumers reining in spending. Restaurateurs are also facing rising costs due to the UK living wage policy and higher business rates. A fall in the value of Sterling has also pushed up the costs of imported food and drink.
Raymond Le Blanc has described the current trading environment as “hostile”.
