Famous Brands, owner of Steers, has placed Gourmet Burger Kitchen (GBK) into administration, ending its costly and mistimed foray into the crowded UK casual dining market that has cost it more than R2.1bn.
Famous Brands, which also owns the Mugg & Bean and Wimpy chains, said on Wednesday that administrators have been appointed, and that there could be an “insolvency sale” of business and assets.
UK media reported that Ranjit Singh Boparan, owner of a British group of restaurants and known as the “Chicken King”, had bought GBK. The Guardian newspaper reported that the deal will save about 650 jobs and 35 restaurants.
Famous Brands bought the upmarket burger-chain in September 2016, about three months after the UK voted to leave the EU in a shock outcome that dented consumer confidence. The chain has been losing money ever since, and was forced to strike a restructuring deal with landlords in 2018.
Famous Brands is one among many SA businesses that were left nursing billions of rand in losses overseas as their strategy to diversify from the weakening local economy unravelled.
Brait, the investment company controlled by Christo Wiese, lost its entire R14.5bn purchase price of UK fashion chain New Look, and Truworths has written down its investment in British footwear chain Office by about R5bn since it bought it in 2015.
The struggling GBK was given a final blow when the Covid-19 outbreak and a national lockdown forced the closure of restaurants, with many not surviving to benefit from an easing of restrictions in the European summer, and a government scheme to subsidise dining and rescue the sector.
It has been further hit by the prospect of more stringent lockdowns as infections in the UK surge again.
In April, the SA restaurant business said it will no longer send more money abroad to prop up the chain.
In 2018, GBK was placed under a form of bankruptcy protection called a company voluntary arrangement, and restructured, closing more than 20 stores. In March, before lockdown, Famous Brands said the business was on the road to recovery due to “operational improvements as well as the benefits derived from the restructuring programme”.
Famous Brands has impaired about R2.6bn of its investment in GBK since 2018.
Retail analyst Chris Gilmour said the lockdown in the UK was the end of the road for Famous Brands’ involvement. “There was no coming back,” he said. “It could have, but it would have taken time and deep pockets. The burger market is terribly competitive and many of its UK competitors have already bitten the dust.”
The group warned investors last month it expects a headline loss in its six months to end-August, from a profit in 2019.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.