What does the future hold?
Conclusion
The casual dining sector was already a challenging operating environment before the pandemic, with more than 1,400 insolvencies in the sector from June 2018 to June 2019* 2 , and multiple high-profile failures and restructures making the news. While there will likely be a rush for tenants and landlords to agree deals for any outstanding liabilities while forfeiture protections are still in place, we are likely at the end of a current run of formal restructuring activity – most of the larger operators in the sector that have needed to formally restructure have already done so. How and when the sector bounces back will depend largely on the performance of the wider economy and the full rollout of the coronavirus vaccine, both helping to restore consumer confidence. Operators are building more flexible relationships with landlords based on shorter tenancies and turnover rents, which could be more sustainable in the long-term. But lockdown has also accelerated the ongoing growth of a disruptive new power in the sector – home delivery companies. While they do represent a useful route to market for many restaurants, charges of up to 30 per cent mean they take a significant slice out of operator’s profits, which may prove to be unsustainable, especially for smaller independents. For every chance of success, flexibility and proactive early engagement with stakeholders will be key.
There are a number of specific challenges when dealing with the sector, which can make them more complex to successfully restructure. For every chance of success, flexibility and proactive early engagement with stakeholders will be key. Phil Reynolds Restructuring Advisory
Phil Reynolds Restructuring Advisory
Restructuring Advisory
Corporate restructuring
Corporate advisory
Contentious insolvency
Solvent restructuring
frpadvisory.com
frpadvisory.com
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