Gourmet Burger Kitchen at risk of insolvency

Blog Insolvency

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Gourmet Burger Kitchen (GBK) has revealed that a number of its branches are set to close in order to save the restaurant chain.

The burger establishment has publicised that 17 branches are at risk of entering insolvency, which would put 250 jobs on the line.

The business has initiated a company voluntary arrangement (CVA), which is an insolvency procedure used by struggling firms that is growing increasingly popular among high street retailers of late.

Over the last 12 months, the hospitality industry as a whole has struggled, with a string of restaurant groups also having to resort to closing outlets, such as Carluccio’s, Prezzo and Chimichanga.

Famous Brands, acquired GBK in 2016 for £120 million and previously warned it was considering “strategic options” for the firm amid a difficult trading period.

Due to the brands sustained under-performance earlier this month, the firm took a pre-take impairment charge of £47.2 million.

At present, GBK operates around 80 stores and employs nearly 2,000 individuals in the UK, whose jobs could be at risk.

Commenting on the announcement, Alex Probyn, President of UK expert services at real estate adviser Altus Group, said: “There has been huge growth in the casual dining market, with restaurant numbers up 15 per cent overall since 2010.

“The race for space has pushed up rents impacting on rateable values. Extra tax for business rates coupled with rising food prices and staff costs through increases in both the national and minimum wages are creating a potentially lethal cocktail as margins are squeezed.”Bottom of Form