Caffe Nero asks landlords to slash rent as it enters CVA

Bosses at struggling Caffe Nero plan to ask their landlords for better terms after the second lockdown forced the coffee chain into a corner.

Chief executive Gerry Ford said that it is now “imperative” that the business takes steps to reduce pressure, as its cafes were forced to close for a second time this year.

He will now turn to landlords to ask for better terms as part of a company voluntary arrangement (CVA), in a bid to slow the flow of cash away from the business.

“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 runs 800 shops in the UK, employing about 6,000 people. Founded in 1997 by Mr Ford, it has expanded into 11 different countries, with a total of 1,000 stores.

It is the latest in a long list of businesses that have been forced to take drastic measures during the Covid-19 pandemic.

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.

Also Check:  'Key side effects' to breakthrough Covid vaccine revealed

The CVA will allow it to “better manage its fixed costs moving forward”.

Will Wright and David Costley-Wood, restructuring experts from KPMG, are working on the CVA.

Mr Wright said: “Caffe 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.”