High Street coffee chain Caffè Nero calls in restructuring experts to avoid store closures
CAFFE Nero is the latest high street chain to be forced into restructuring its business after profits were hit by the coronavirus pandemic.
The cafe, which operates 660 sites across the UK, has launched a Company Voluntary Arrangement (CVA) to restructure its business and avoid store closures and job losses.
A CVA is a procedure that allows companies to continue trading while allowing a proportion of its debts to be paid back over time.
The process involves agreeing with its creditors, including the landlords of its stores, ways to cut costs without the whole business going under.
It is "the best rescue tool for a company that is viable going forward but is burdened by historic debt", according to .
Caffe Nero is hoping to keep store closures and any related job losses to a minimum.
It's understood the company will look to redeploy any staff if any stores are forced to close.
Caffè Nero employs about 5,000 people and says it serves 135 million customers annually.
Gerry Ford, Caffè Nero's founder, said the second lockdown in England forced the company to act quickly after profits declined.
The company has suffered losses due to the new measures - including curbs on socialising and the Government's advice for people to work from home.
Mr Ford said: "We have expanded our coffee at home range, launched Click and Collect for the first time via our app and we have begun offering a delivery service through Uber Eats.
"However, with our dine-in facilities now closed for a second time, we have little option but to launch this CVA to safeguard the future of our business.”
FINANCIAL CHALLENGES
The founder added the coffee chain had been trading strongly before the Covid-19 pandemic.
But he explained: "Like so many businesses in the hospitality sector, the pandemic has decimated trading.
"And although we had made significant progress in navigating the financial challenges of the first lockdown, the second lockdown has made it imperative that we take further action."
Mr Ford, who founded Caffè Nero in 1997, has appointed leading accountants KPMG to advise on the CVA.
Will Wright, head of regional restructuring at KPMG, 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."
The company hopes to get its finances in order, reduce its rent liabilities and exit loss-making stores.
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The coffee chain has been heavily impacted by the restrictions put in place to curb the spread of coronavirus - just as its rivals have.
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