Caffe Nero is on the verge of bankruptcy: the coffee chain blames the second lockdown as it becomes the youngest victim of a pandemic on the high street
- The coffee chain was forced to voluntarily put itself in a company agreement
- 62-year-old founder Gerry Ford said the second suspension pushed the company into action
- He now hopes to renegotiate leases with landlords and cut costs
- Caffe Nero had to shut down for a few months during the initial lockdown
Caffe Nero is the youngest high profile victim of the Covid-19 pandemic – and the second national lockdown is blamed for its plight.
The coffee chain was forced into a voluntary corporate agreement last night, a type of bankruptcy that allows companies to continue trading while trying to get their finances in order.
62-year-old founder Gerry Ford said the second lockdown pushed the company into action. The chain suffered from social restrictions, fewer shoppers in the city centers, and government advice that workers should stay away from their offices.
Mr. Ford, who founded the company in 1997, hired the leading auditors KPMG to advise on the CVA.
Caffe Nero (pictured) is the youngest high profile victim of the Covid-19 pandemic. The second national block is held responsible for their plight (file photo).
He hopes that he will now be able to renegotiate leases with landlords and cut costs, which would allow the company to rebuild its business after the pandemic ends.
Caffe Nero had to shut down completely for several months during the first block and can now only offer takeaways.
The company employs more than 6,000 people in 800 stores across the UK but hopes closings and job losses will be minimal.
Many of its branches are located in city centers and transportation hubs, which means it has lost habits due to people working from home.
"With our dine-in facilities now closed for the second time, we have no choice but to start this CVA to secure the future of our business," Ford said last night.
Prior to the pandemic, the chain had strong trading with long, unbroken sales growth, he said.
62-year-old founder Gerry Ford (pictured) said the second lockdown had pushed the company into action. He has hired the leading auditors KPMG to advise on the CVA
"Like so many hospitality companies, the pandemic has decimated trade and while we had made significant progress in addressing the financial challenges of the first lockdown, the second lockdown required further action."
He added that the goal is to "continue to protect jobs that we have focused on since March".
Caffe Nero had to shut down completely for several months when it was first blocked and can now only offer takeaways
Caffe Nero had taken steps to adapt to the virus by offering click-and-collect service and home delivery, but that wasn't enough.
Will Wright, Head of Regional Restructuring at KPMG, said: “Caffe Nero is an iconic brand on the main streets of the UK with an extremely loyal customer base.
"Like many others in the industry, however, the impact of the measures introduced in response to the Covid-19 pandemic has been devastating."
CVAs have been used by other big names like Debenhams, Clarks, Clintons, and Homebase.
However, critics say they are sometimes used as a means to reduce debt and encourage landlords to cut rental costs.
However, they are designed to give inherently viable businesses that have gotten into trouble a chance to get back on their feet.
Caffe Nero's CVA must be approved by its creditors and landlords.
Separately, WH Smith confirmed that 25 stores will close, putting 200 jobs at risk after reporting an annual loss of £ 280 million.
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