Quantuma to launch CVA with Leon
Business advisory firm Quantuma has been appointed by Leon Restaurants Limited (Leon) to launch a Company Voluntary Arrangement (CVA).
The naturally fast food restaurant chain was founded in 2004 with its first site on Carnaby Street, London. Since then, the chain has expanded to operate 75 sites globally both owned and franchised. The company-owned restaurants in the UK total 44, in prime locations and transport hubs, predominantly across central London.
As a result of the restrictions placed on retail and leisure establishments during the UK lockdown, 32 of these stores were forced to temporarily close. However, during the first lockdown, many remained open to facilitate the launch of a number of essential initiatives, including “FeedNHS” – created by Leon to provide meals to critical care teams in 38 key hospitals for the worst eight weeks of the crisis. Leon and its partner organisations served over one million meals to these teams at no cost to the hospitals.
The CVA proposal comes as the chain continues to suffer from severely reduced footfall numbers following the second national lockdown, and as tougher restrictions continue to be introduced in the majority of cities and towns throughout the UK.
There has been a significant reduction in the number of city centre workers attending their offices and also a severe reduction in domestic and international tourists. In this second lockdown Leon is experiencing a 70% reduction in sales vs the same time last year.
In the year to 30 December 2019, Leon achieved revenues of £76.3m and strong operating profit, and planned to open 30 new restaurants in 2020, most of which had already been identified.
The Leon CVA delivers no cuts to existing staffing levels, and preserves the majority of the firm’s store footprint. The CVA is focused upon ensuring the business can deal with the challenges it is faced with, the ongoing uncertainties created by the pandemic, and providing a platform to return to a more positive trajectory in the longer term.
Quantuma’s Andrew Andronikou and Brian Burke, as Joint Nominees, will oversee the CVA process.
Andrew Andronikou, managing director at Quantuma commented: “The retail and casual dining sector has suffered significant damage throughout the Covid-19 pandemic, the ongoing uncertainties still need to be addressed. While the plans for a UK vaccination programme are promising, the fact remains that a return to normal may still be some way off, and this uncertainty continues to have significant consequences to businesses reliant on footfall and a return to normal working practices.
“Our number one priority, as we work with the board of Leon over the coming weeks and months, will be to allow the business to navigate the current challenges and help the business return to its positive trajectory whilst protecting jobs and minimising the need for store closures.”
John Vincent, founder and CEO of Leon said: “The CVA is intended to provide the company with a foundation to first survive and then carefully rebuild. We had a growing and profitable business before Covid. Despite taking many actions to reduce cost and optimise revenue during the crisis, the continued lockdowns and restrictions have made this CVA a necessity.”
In formulating the CVA, the company directors and the Joint Nominees have engaged with the British Property Federation (BPF).
Melanie Leech, chief executive, British Property Federation (BPF) comments: “These situations are never easy, particularly now for the retail, hospitality and leisure businesses on our high streets at the sharp end of the Covid-19 pandemic. Property owners, however, need to take into consideration the impact on their investors, including the millions of people whose savings and pensions are invested in commercial property, as they vote on any CVA proposal.
“Leon and Quantuma engaged with the BPF before launching this CVA proposal. This has provided us an opportunity to improve understanding of property owners’ interests and concerns, but ultimately it will be for individual property owners to decide how they will vote on the CVA.”
The Joint Nominees are being advised by Duncan Lockhart, partner at Clyde & Co LLP, and his team.