The bosses of Caffe Nero plan to ask their landlords for better conditions after the second lockdown has forced the coffee chain into a corner.
CEO Gerry Ford said it is now “imperative” that the company take steps to ease pressure as its cafes have had to close for the second time this year.
He will now contact the landlords to ask for better terms under a Voluntary Corporate Agreement (CVA) to slow the flow of cash out of the business.
“Like so many hospitality companies, the pandemic has decimated trade, and although we had made significant progress in addressing the financial challenges of the first lockdown, the second lockdown made it imperative to take further action,” said Ford.
Caffe Nero operates 800 stores in the UK and employs around 6,000 people. Founded in 1997 by Mr. Ford, the company has expanded into 11 different countries with a total of 1,000 branches.
It’s the latest in a long list of companies forced into drastic action during the Covid-19 pandemic.
Shoe sellers Clarks and Pizza Express are among the other companies to complete CVAs after their debt expired from them during the period.
Companies like Caffe Nero, which caters to many commuters and office workers, were particularly hard hit during the pandemic.
Since many employees continue to use their kitchen tables as offices and the number of visitors in the city centers is still low, “it is unclear how long this will affect Caffe Nero,” according to the company.
The CVA will enable him to “better manage his fixed costs in the future”.
Will Wright and David Costley-Wood, restructuring experts at KPMG, work at the CVA.
Mr Wright said, “Caffe Nero is a cult brand on the main streets of the UK with an incredibly loyal customer base.
“As with many others in the industry, however, the impact of the measures introduced in response to the Covid-19 pandemic has been devastating.
“In bringing this CVA proposal forward, the Directors worked hard to find a fair compromise with stakeholders to provide the flexibility the company desperately needs to weather the pandemic.”