Byron’s Burgers faced a tricky start to 2018 when they became insolvent and had to be rescued via a Company Voluntary Arrangement (CVA). Recent talks suggest that the casual dining chain is facing liquidity issues if their financials do not improve.
The CVA agreement proposed with KPMG meant 19 restaurants were closed and 5 under-performing ones had their rent reduced, leaving 50 outlets remaining. Additionally, they received a new investment of £34.5 million, allowing £25 million of debts to be paid, and the rest of the investment to be kept within the business.
In July, it was said that trading conditions were hard as the new shareholders and managers were in the process of restructuring the cost base. If trading conditions deteriorate further or other trading shocks appear, liquidity problems will be a risk for the chain.
Food price inflation, business rate revaluations and the introduction of the new minimum wage and apprenticeship levy (pushing up payroll) has not helped. With consumers spending less money on dining out, due to low consumer confidence from political uncertainty and inflation - the chains' sales are at threat, with the large costs worsening the performance.
Auditors of the financials for the company, remark it as a going concern. However, a spokesperson for Byron’s Burgers says ‘’the liquidity statement in our financial filings is typical for a company in the hospitality sector which has recently undergone a CVA. We believe there are sufficient internal and operating opportunities available to Byron to withstand any potential shocks the sector may experience in the near future.’’