Caffe Nero calls for rent lifeline as pandemic ‘decimates’ coffee sales
Company becomes latest to launch turnaround plan after second lockdown keeps commuters and shoppers home
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Your support makes all the difference.Caffè Nero has called for a lifeline from its landlords after the pandemic “decimated” its business.
The coffee chain launched a restructuring plan after a second lockdown began across England alongside tough restriction across much of the rest of the UK. Boss and founder Gerry Ford said the restrictions meant urgent action was necessary.
Under the Company Voluntary Arrangement, which must be backed by Caffè Nero’s creditors before it can go ahead, rent on most of the chain’s sites would be based on turnover rather than fixed at a certain level.
Caffè Nero said that, “with many people continuing to work from home, ongoing limits to social interaction and a sustained reduction to footfall in city centres, it is unclear how long this will impact Caffè Nero”.
The company plans to redeploy workers where possible if it has to shut down any of its 1,000 branches.
It is the latest high street name to take drastic measures as a result of the Covid-19 pandemic.
Pizza Express announced in September it would shut 73 restaurants as part of a turnaround plan and fashion brand All Saints is going ahead with its CVA after gaining creditors’ approval in July.
Hospitality businesses like Caffe Nero and Pret a Manger, which rely on commuter and town-centre trade, have seen sharp falls in revenue as office workers and shoppers have stayed home.
Pret a Manger announced earlier this year that it was cutting 3,000 jobs, around a third of its workforce, while Costa Coffee said it would make 1,650 staff redundant.
Caffè Nero said on Friday that a CVA would allow it to “better manage its fixed costs moving forward”.
KPMG has been appointed to run the CVA and creditors have until 30 November to vote on the proposals. At least 75 per cent must approve in order for the plans to go ahead.
Will Wright, a restructuring expert who will manage the process said: “Caffe Nero is an iconic brand on the UK’s high streets with a terrifically loyal customer base.
“However, like many others across the sector, the impact of measures introduced in response to the Covid-19 pandemic has been devastating.
“In putting forward this CVA proposal, the directors have worked hard to strike a fair compromise with stakeholders to provide the flexibility the business urgently needs to get it through the pandemic.”
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