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Caffè Nero launches CVA proposal as pandemic 'decimates' trading

13 November 2020 by
Caffè Nero launches CVA proposal as pandemic 'decimates' trading

Caffè Nero is the latest high street brand to launch a company voluntary arrangement (CVA) proposal due to the impact of the coronavirus pandemic on its business.

The coffee chain's chief executive Gerry Ford said it had "little option" but to restructure following the closure of its dine-in areas for a second time this year.

More than 6,000 people are employed across 800 Caffè Nero stores in the UK, many of which are located in city centres or transport hubs.

The company said it was undertaking a CVA to "better manage" its fixed costs going forward by negotiating with landlords and creditors.

It is not certain if any stores will close, but if they do the numbers are expected to be minimal.

Ford said: "Prior to Covid-19, the business had been trading strongly, and had achieved 83 consecutive quarters of sales growth. However, like so many businesses in the hospitality sector, the pandemic has decimated trading, and although we had made significant progress in navigating the financial challenges of the first lockdown, the second lockdown has made it imperative that we take further action.

"I am grateful for the support of our business partners, suppliers and landlords, as we address our fixed cost base so we can continue to protect jobs, which has been our focus since March."

Sky News reported last month the chain was expected to seek steep rent cuts from landlords to survive the pandemic.

Will Wright and David Costley-Wood from KPMG's restructuring practice are the proposed nominees of the CVA.

Wright said: "Caffè Nero is an iconic brand on the UK's high streets with a terrifically loyal customer base. However, like many others across the sector, the impact of measures introduced in response to the Covid-19 pandemic has been devastating.

"In putting forward this CVA proposal, the directors have worked hard to strike a fair compromise with stakeholders to provide the flexibility the business urgently needs to get it through the pandemic."

Caffè Nero was founded by Ford in 1997 and has grown to more than 1,000 stores in 11 countries in 23 years.

A number of other high street restaurant chains have undergone CVAs since March, including Wahaca, PizzaExpress,Busaba and YO!

Photo: Shutterstock

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