Fast-food chain Leon is poised to enter administration, shut several outlets and make redundancies as part of a rescue plan by its new owner to revive the beleaguered brand, reports BritPanorama.
The London-headquartered business was reacquired last month by co-founder John Vincent from Asda in a transaction reported to be between £30m and £50m, significantly less than the £100m paid by billionaire brothers Mohsin and Zuber Issa in 2021.
It has now been confirmed that Leon, which has branches around the UK, has sought an administration order “for the purpose of formulating proposals for a Company Voluntary Arrangement (CVA) to help accelerate the restructuring of the business”.
In a statement, the company indicated that Mr Vincent and his team’s immediate focus is “to reduce the number of loss-making restaurants”.
Leon attributed its difficulties to “changing work patterns, brought on by the Covid-19 pandemic, and also tax increases,” which have “combined to place further strain on the business and the wider hospitality industry in recent years,” as reported by City AM.
The firm added: “Although he believes that the company drifted from its values under the ownership of EG and Asda, Vincent has been sympathetic to the challenges they had as owners.”
Mr Vincent said: “In the last two years, Asda had bigger fish to fry, and Leon was always a business they didn’t feel fitted their strategy.”
“If you look at the performance of Leon’s peers, you will see that everyone is facing challenges – companies are reporting significant losses due to working patterns and increasingly unsustainable taxes.”
Leon is expected to “spend the next few weeks discussing the plans with its landlords” with the support of advisers Quantuma and laying out options for the future of the company.
A statement continued: “Leon then plans to emerge from administration as a leaner business that can return to its founding values and principles more easily.”
“In the meantime, all the group’s restaurants remain open serving customers as usual.”
The firm confirmed that Leon’s grocery arm will remain unaffected by the CVA.
Precise figures regarding which sites will shut and how many positions will be axed have yet to be disclosed.
Leon said: “In the first instance, we will look to find people roles in other Leon restaurants.”
“Where that is not possible, for example, if there is no Leon restaurant within commuting distance, people will receive redundancy payments.”
“In addition, we have established a programme with Pret A Manger where affected Leon employees can apply for jobs via a dedicated channel.”
“I would like to thank the Pret CEO Pano Christou for supporting us and our team at this important time.”
Mr Vincent also called for a reassessment of what he characterises as an untenable tax burden facing the industry.
He said: “Today, for every pound we receive from the customer, around 36p goes to the government in tax, and about 2p ends up in the hands of the company. It’s why most players are reporting big losses.”
“The immediate priority is to close the most unprofitable restaurants. In many cases we have found other brands to replace us, and in others we will be asking the landlords to take the leases back and find better-suited operators themselves.”
“We will rebuild Leon on its core values and I hope to be providing jobs to many more people once we have returned to profitability and can continue to grow again.”
A spokesperson from Quantuma said: “We are looking forward to working with the LEON team to deliver the optimal outcome for all stakeholders of the business, the creditors, suppliers, and employees of the company.
“Leon is obviously a much-loved and cherished member of the retail food community as we have already had very positive support from its supplier base and many of its landlords.”
Leon was established in 2004 by John Vincent, Henry Dimbleby, and Allegra McEvedy.
Currently, it operates 71 restaurants, owns 44 sites, and has 22 franchised locations.
Prior to Leon being sold by Asda in September, City AM reported that it had cut hundreds of jobs due to a “challenging” year marked by high cost inflation and reduced customer spending.
The fast-food chain reduced its workforce by 17 percent, or 224 employees, to a total of 1,120 throughout 2024, according to its most recent accounts, as it aimed to curb substantial losses.
The company recorded a 3.9 percent decrease in sales to £62.5m, along with losses of £8.4m. This represents a significant improvement on the £12.5m loss reported in the previous year.
This unfolding situation at Leon underscores the broader trends affecting the UK hospitality sector, where operators are grappling with evolving consumer behaviours and burdensome tax structures. The outcome of their restructuring efforts could hold significant implications for both employees and the larger market landscape. Maintaining core values while addressing financial realities will be key for any prospect of recovery.
