Leon appoints administrators with plans to close restaurants and cut jobs

Leon has applied for an administration order that could see several loss-making restaurants close.

 

The 71-strong healthy fast food chain is planning to undergo a Company Voluntary Arrangement (CVA) after being bought back by its co-founder John Vincent last month.

 

Vincent sold Leon to petrol forecourt operator EG Group for £100m in 2021 and it later came under ownership of Asda as part of a wider £2b deal.

 

After an initial review of the business, Vincent is looking to reduce the number of loss-making restaurants.

 

This will result in numerous job losses, and Leon said it had created a programme to support anyone made redundant.

 

Internal challenges, changing work patterns and tax rises had placed a further strain on the business, Leon said.

 

While Vincent has admitted Leon drifted from its values under EG and Asda, he said he was sympathetic to the challenges they faced as owners.

 

“In the last two years, Asda had bigger fish to fry, and Leon was always a business they didn’t feel fitted their strategy,” said Vincent.

 

“If you look at the performance of Leon’s peers, you will see that everyone is facing challenges – companies are reporting significant losses due to working patterns and increasingly unsustainable taxes.”

 

Leon has appointed administrator Quantuma and will spend the next few weeks discussing plans with landlords.

 

All restaurants will remain open in the meantime and Leon’s grocery business is unaffected by the CVA plans.

 

Vincent said affected staff would be offered roles in other Leon restaurants or receive redundancy payouts. The group has also partnered with Pret A Manger to allow Leon staff to apply for jobs with the rival coffee chain via a dedicated channel.

 

The co-founder has also called for an overhaul of the “unsustainable” tax burden hitting the hospitality industry.

 

He added: “Today for every pound we receive from the customer, around 36p goes to the government in tax, and about 2p ends up in the hands of the company. It’s why most players are reporting big losses.

 

“The immediate priority is to close the most unprofitable restaurants. In many cases we have found other brands to replace us, and in others we will be asking the landlords to take the leases back and find better suited operators themselves.

 

“We will rebuild Leon on its core values and I hope to be providing jobs to many more people once we have returned to profitability and can continue to grow again.”

 

Under the current plan, Leon will exit administration following a CVA early next year.

 

Quantuma said: “Leon is obviously a much loved and cherished member of the retail food community as we have already had very positive support from its supplier base and many of its landlords.”

 

Vincent launched Leon with healthy food campaigner Henry Dimbleby and chef Allegra McEvedy in 2004 and was awarded an MBE in 2015 for his work to improve nutrition in schools.

 

Despite Leon’s original focus on healthier food, under ownership of EG and Asda it faced criticism for moving towards serving higher-calorie menu items such as chicken nuggets and cookies.

 

Vincent has already pledged to overhaul Leon’s menu, scrap its coffee subscription scheme at the end of the year, and reintroduce martial arts-inspired training for staff.

 

Read more: The future of Leon: Can John Vincent turn the brand around?