Burger King eyes restaurant closures in pre-pack deal
Written by Rother Radio News on 29/09/2020
Burger King, the fast-food giant, is preparing to close a number of its UK restaurants as part of a restructuring process triggered by the coronavirus pandemic.
Sky News has learnt that Burger King’s British operations have drafted in advisers from AlixPartners to review options for one of its subsidiary companies, which directly owns approximately 25 of the chain’s outlets.
Sources said the company was examining a company voluntary arrangement (CVA) or, more likely, a pre-pack administration for the subsidiary.
The restructuring could entail the permanent closure of up to 10 of its restaurants with a number of potential job losses, they added.
Burger King’s master franchisee in the UK is the private equity firm Bridgepoint, the former owner of Pret a Manger.
Bridgepoint took on the role in 2017, when it acquired the exclusive rights to the Burger King brand.
In total, the chain trades from roughly 530 restaurants in the UK, with some sites yet to reopen following the UK-wide lockdown.
The main franchisee directly owns about 130 of the 530 sites.
Insiders indicated that a broader restructuring of the business was a possibility, depending upon further spikes in COVID-19 cases and ensuing lockdowns and enforced closures of restaurants.
Bridgepoint is understood to have been discussing a refinancing of the Burger King business to enable funds to be invested in opening more drive-thru restaurants.
Rival McDonald’s is understood to have traded well since the UK-wide lockdown ended in June, partly as a result of its more substantial drive-thru estate.
Burger King is understood to want to open at least 30 new drive-thru sites in the UK next year.
Alasdair Murdoch, Burger King UK chief executive, has been a vocal critic of policy-making towards the hospitality sector since the start of the COVID-19 crisis.
In March, he declared that the chain would not be paying its quarterly rent bill, and has called on commercial landlords to work with food and beverage operators to resolve the deepening impasse between them.
“This crisis affects the whole UK economy, which will take time to recover,” Mr Murdoch wrote in an open letter to landlords.
“The hospitality industry is especially important to the UK economy. It is the third-largest private sector employer, employs 3.2m people and is [twice as large as] the financial services sector”.
Britain’s casual dining and wider restaurant industries have been dealt a devastating blow by the pandemic.
This week, Cote, the French restaurant group, became the latest business to succumb to the financial pressure caused by coronavirus when it was sold through a pre-pack administration to new investors.
A number of other burger chains have also changed hands, including Byron, which saw hundreds of jobs wiped out in a pre-pack deal during the summer.
GBK is also in the process of changing hands.
The Burger King brand is owned globally by Restaurant Brands International, a New York-listed company.
Burger King and Bridgepoint declined to comment on Tuesday evening.
© Sky News 2020