Caffe Nero on the brink of insolvency as it prepares to ask for rent cuts
- Credit: EDP © 2001
Caffe Nero is on the brink of insolvency as it is considers launching a company voluntary arrangement (CVA) putting 800 sites at risk.
A CVA is an insolvency procedure which sees a company ask its creditors - in this case landlords - for a cut in its overheads in order to remain trading.
Caffe Nero has lined up KMPG to approach landlords about the deal - of which 75pc will need to agree to the terms. Chief executive of the chain Gerry Ford blamed the pandemic for the struggles facing the business, saying it is “imperative” that the business takes steps to reduce pressure as its cafes were forced to close for a second time this year.
“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,” Mr Ford said.
Caffe Nero employes around 6,000 people across the country, including those in Norfolk sites including four outlets in Norwich and one in King’s Lynn.
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A Caffe Nero spokesman said if it has to shut down any outlets it will try to redeploy workers, and store closures and job losses will be “minimal”.
It is the latest in a long list of businesses that have been forced to take drastic measures during the Covid-19 pandemic.
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Shoe seller Clarks and Pizza Express are among the other companies to enter CVAs during the period, after their debts ran away from them.
Companies like Caffe Nero, which caters to many commuters and office workers, have been especially hard hit during the pandemic.
As many workers continue to use their kitchen tables as their office, and footfall remains low in city centres, “it is unclear how long this will impact Caffe Nero”, the business said.
The CVA will allow it to “better manage its fixed costs moving forward”.