Healthy fast-food chain calls creditors’ meeting
The backers of the Irish franchise for healthy fast-food chain Leon have made a decision to wind up the company after Covid changed office-worker eating patterns.
Around 30 staff at three locations in Dublin were informed last week that the company would cease trading.
The company had raised €3.8m in equity and opened its first outlet in Temple Bar in May 2019. It had plans to open 20 shops by 2023.
However, after efforts to secure new funding failed in recent weeks, a creditors’ meeting has been called.
Having survived Covid lockdowns, franchisee managing director Stuart Fitzgerald, a Waterford-based accountant and businessman, said he had hoped business would recover when offices reopened. In addition to the Temple Bar location, it had opened in Millennium Walkway and in Liffey Valley in August.
However, he said that many workers were now in their offices for only a few days every week, and were opting for “splurges” rather than healthy food choices on a daily basis.
The Irish Leon franchise is controlled by Cibus Concepts, which is backed by several high-net-worth individuals, including Michael McElligott of Tetrarch Capital.
“Our shareholders were extremely supportive,” Fitzgerald told the Sunday Independent. “I think the business case just didn’t support putting in any more capital to try to keep it going when it really wasn’t working.
“And it’s a shame, because I think it would have worked – but the timeline [for a return to pre-pandemic conditions] is so long. It could have taken another three or four years to get back to the original position.”
They spent the past eight weeks seeking fresh investment for the company. “We ran through a process of trying to find a new purchaser for the company who may be able to come in, manage the brand and protect jobs,” he said.
“As it became obvious that that wasn’t going to bear any fruit, we were left with the option that we had to take insolvency advice. That advice was, in the best interests of the company and the creditors, we should cease the operation and call a creditors’ meeting to wind it up.”
Fitzgerald said that Brexit also had brought with it complications. Once Brexit became a reality the company decided to source items for the menu in Ireland. But when the original scale planned for the chain did not materialise, relationships with suppliers in Ireland became more difficult.
“When we brought Leon to Ireland, the plan was 20 restaurants in five years. And we were able to get Irish suppliers quite excited about that story. We built relationships, and got some amazing support from local suppliers.
“But once volumes dropped after Covid – and once we were a two-restaurant business with no real line of sight to the rest of the outlets it just became unviable for the local supply-chain partners.
“Under normal conditions, we would have fallen back on the UK supply chain. The whole Brexit piece kicked off, and we couldn’t get product in from the UK.
“It became extremely difficult to manage operationally, from a supply-chain perspective – and because we’re part of a brand, we couldn’t just make up our own menu. So Brexit compounded the Covid impact.”
He said the restaurant market remains unpredictable.
“It’s very, very difficult to try to build out a business plan for something like hospitality or retail at the moment, trying to make predictions on where footfall will be.”
He said he was very grateful to all the workers in the company and efforts were being made to find staff alternative employment.
For his own part, he was philosophical. “There’s a high degree of risk in any entrepreneurial endeavour – and you have to accept when it just doesn’t work.”
Excess food from the business has been donated to Food Cloud.
The company has called a meeting for June 20, and proposes to appoint Declan Taite of Kroll Advisory as liquidator.
Last summer, EG Group, run by Mohsin and Zuber Issa, bought the 70-strong Leon chain in the UK for £100m.