Duff & Phelps administrates restaurant chain amid poor hospitality spending
Duff & Phelps has been appointed as the administrator for collapsed up market dining chain Prescott & Conran. The restaurant is said to have struggled with poor sales figures and a premium in imported ingredients thanks to Brexit uncertainty, as the casual dining crunch continues to hit UK companies in 2018.
An upmarket restaurant group has shown that it is not only groups dependent on low to middle income consumers which are in a vulnerable position at present. Prescott & Conran, a restaurant group co-founded by Sir Terence Conran – the British design guru who also founded home ware retailer Habitat – has collapsed, shutting its three remaining outlets in London and putting 168 jobs at risk in the process.
The news comes after a succession of chains had fallen victim to a so-called “casual dining crunch” in the UK. Notably this saw gourmet burger store Byron, and Italian dining chains Prezzo and TV chef Jamie Oliver’s Jamie’s Italian enter into Company Voluntary Arrangements (CVAs), in a bid to secure their futures, resulting in the closure of multiple sites and the loss of hundreds of jobs across the UK. Most recently Carluccio's was recently given approval for a restructuring programme which will likely see it close dozens of restaurants, putting 500 jobs in doubt. The trend has been tied to the stagnation of wages in the UK reducing the spending power of the majority of consumers in the UK, while Brexit anxieties saw a collapse in the value of the pound, which made importing ingredients more expensive.
While the high end eateries may have catered to a different clientele to the previously mentioned chains, it seems that this did not insulate it from similar market turbulence, however. Precott & Conran’s problems seem to have been inflicted by the same mechanisms as the others, though as all its outlets were based in London, the group of restaraunts may also have been hit disproportionately by an increase in business rate increases in London.
As news broke that Prescott & Conran would be entering administration, one industry insider told the press that upmarket establishments were also struggling as underlying sales were falling across the industry. This is because as consumers reign in spending and subsequently eat out less, they prioritise trips to top-tier restaraunts over chains, no matter how high end they attempt to appear. This means that while top locations might even see boosts in business at present, second and third choice food outlets can suffer. The source concluded, “Even if you are doing the same level of sales as last year, profits are down. It’s only a matter of time before we start to see more closures.”
Professional services firm Duff & Phelps has been appointed to oversee the winding down of Prescott & Conran, and Stephen Clancy, one of the firm’s administrators, reiterated the poor state of the UK’s dining market, stating, "The restaurant trade is going through a period of sustained change off the back of changing consumer demand. As such, the group's directors made the difficult decision to exit underperforming restaurants."
Remarking on the administration of Prescott & Conran itself, Clancy added, "Over the past few months, the group has been undertaking an operational review looking to enhance profitability and exit underperforming businesses. As part of that process, some restaurants had already been closed."
Duff & Phelps – which recently published research finding that London is once again considered the financial capital of the world – is also presiding over the administration of fashion group Calvetron, at present. The firm recently announced that the process will see the closure of 102 Jacques Vert and Precis concessions in the UK and Republic of Ireland, resulting in 449 job losses.
