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Wednesday 23 October 2019

Gourmet Burger Kitchen owner blames Brexit for biting into sales

Famous Brands reported numbers showing another drop in GBK’s sales.

Gourmet Burger Kitchen is planning restaurant closures (PA)
Gourmet Burger Kitchen is planning restaurant closures (PA)

By Alys Key, Press Association City Reporter

The owner of Gourmet Burger Kitchen has blamed the slow pace of Brexit negotiations for dwindling sales in the UK, as it makes plans to close restaurants.

South African company Famous Brands, which acquired GBK just months after the EU referendum in 2016, said subdued consumer sentiment had been exacerbated by uncertainty over Brexit.

This comes less than a week after GBK announced plans to close 17 of its 85 restaurants in the UK through a company voluntary arrangement (CVA).

In a trading statement, Famous Brands said: “The trading environment was characterised by intensified competition, declining footfall in malls, and rising input costs of labour and property rates.

“The slow pace of progress on Brexit negotiations also continued to subdue consumer sentiment.”

Sales at GBK in the 26 weeks to August 26 dropped by 9.7% on a like-for-like basis, compared to a 3.2% decline in the comparable period last year.

The brand made an operating loss of £2.6 million for the first half.

Meanwhile, classic UK burger brand Wimpy, which is also owned by Famous Brands, reported a 13.6% increase in revenue.

The 75-strong chain has managed to keep prices down through a collaboration with GBK, giving both brands greater buying leverage.

Famous Brands has already announced that it will take a pre-tax impairment charge of 874 million Rand (£47.2 million), in part due to GBK’s sustained underperformance.

This pushed the company to a loss before tax of 558 million Rand (£30 million) for the six months to August 31, compared to a profit of 270 million Rand this time last year.

Overall, revenue was up 5.4% during the period.

PA Media

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