- Byron’s creditors approved a CVA plan on Wednesday.
- As many as 20 restaurants could close as a result .
- Britain’s casual dining sector is suffering from a nationwide consumer spending squeeze.
LONDON – Creditors of stricken burger chain Byron have voted almost unanimously to approve a company voluntary arrangement (CVA), which could result in as many as 20 restaurants closing.
99% of the firm’s creditors voted in favour of the proposal on Wednesday, which was initially proposed on January 8. The CVA needed 75% approval to pass.
A CVA is a restructuring effort that will help Byron cut its bills, and will include the closure of a number of restaurants. The number to be closed has not been disclosed, although it was earlier reported that Byron could close as many as 20.
“As a result of this restructuring process, a number of our restaurants will close and we will do everything possible to redeploy staff to other sites and initiatives,” Byron’s CEO Simon Cope said.
Cope, who lead a turnaround of Japanese casual chain Wagamama, was brought in to help revive Byron last May.
According to City AM, the CVA “divides Byron’s 67 leasehold sites and nine non-operational leaseholds into three categories.”
The first category will see 51 sites with unchanged arrangements, the second will see Byron pay two-thirds rent on five restaurants, while the final category contains the 20 restaurants under threat of closure. Byron will pay 55% rent on those sites. These arrangements will be in place for six months while Byron’s management negotiates what to do with the sites that are under threat.
“Today’s creditor vote in favour of the CVA proposal will allow Byron to conclude its previously negotiated financial restructuring and is a key step in the directors’ turnaround plan,” Will Wright, a restructuring partner at KPMG and joint supervisor of the CVA, said in a statement
Byron was founded in 2007 and was one of the first restaurants to spearhead a revolution in the UK’s burger market, transforming the image of the fast food from an unhealthy, down-market food to an indulgent treat.
The chain expanded quickly and was sold in 2013 for £100 million to London private equity group Hutton Collins Partners.
But Byron has struggled with “gathering economic headwinds” recently, according to KPMG partner Will Wright. Sales growth slowed from 24.4% in 2015 to 16.7% in 2016, the Telegraph reported, with profit also dipping.
Byron’s trendy burger offering has suffered in recent years amid a consumer spending squeeze driven by rising inflation. Inflation peaked at 3% last year, driven by the slump in the value of the pound after 2016’s Brexit vote.
Fulham Shore, the owner of trendy pizza chain Franca Manca, another prominent fixture in the UK’s casual dining scene, saw shares crash 20% in September after the business issues a profit warning citing a “sector-wide slowdown.”