Leon has announced plans to close approximately 20 of its restaurants and reduce its workforce as part of a significant restructuring of the high street food chain.
The company has appointed Quantuma as administrators following the reacquisition of Leon by its original co-founder, John Vincent, from Asda last month.
This move places the future of the 71-store chain’s underperforming locations at risk, although no closures have been officially confirmed, and all stores remain operational at this time.
Leon, which employs around 1,000 individuals, has not yet disclosed the specific number of employees who will be affected. The company has stated its intention to prioritize finding alternative positions for affected staff within its remaining stores.
Mr. Vincent noted that the company had been incurring losses of approximately £10 million annually. He added that, following an initial assessment, the “immediate priority” was to close “the most unprofitable restaurants.”
“In many instances, we have identified other brands to take our place, and in others, we will be requesting that landlords reclaim the leases and identify more suitable operators,” he stated.
He also indicated that customers “will likely see big changes on the menu from next spring”.
To support employees who may not be able to secure positions within other Leon outlets, the company has partnered with Pret A Manger to facilitate job applications at the coffee chain.
Leon plans to collaborate with Quantuma in the coming weeks to discuss the restructuring plans with landlords and determine the best course of action for the company’s future.
Mr. Vincent expressed his belief that the company had deviated from its core values under the leadership of EG and Asda, while also acknowledging the challenges they faced in managing the “healthier” fast-food chain.
“In the last two years, Asda had bigger fish to fry, and Leon was always a business they didn’t feel fitted their strategy”, he said.
“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.”
Asda previously stated that selling Leon back to Mr. Vincent would allow the company to refocus on its core retail operations, encompassing its supermarkets and petrol stations.
Asda has been contacted for comment.
Leon also attributed its current difficulties to internal challenges, shifting work patterns resulting from the Covid-19 pandemic, and tax increases – all of which have impacted the broader hospitality sector.
Mr. Vincent emphasized the need for the government to re-evaluate the tax burden placed on the hospitality industry.
“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,” he said.
Known for serving its meals in a cardboard box with brown rice and fresh herbs, Leon has stated its mission is to prove that its possible to serve fast food that “tastes good but does you good too” .
It opened its first branch in London in 2004, and at the time stood out against the fried chicken, burger and chips menus of its rival fast food chains.
Leon’s administration process comes after Pizza Hut’s UK operator DC London Pie announced it was closing 68 restaurants and 11 delivery sites in October, making more than 1,200 workers redundant.
Administrators said DC London Pie had been hit by a combination of “challenging trading conditions and increased costs”, including “tax-related obligations”.
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