Popular Italian restaurant chain to close SIX branches and cut 190 jobs in deal to save brand
A POPULAR Italian restaurant chain is set to close six of its locations as part of a deal to save the brand.
Gusto will shut half a dozen locations that it says have become “economically unviable”.
AlamyThe Italian restaurant chain has 13 sites across the UK, including in Manchester and Liverpool[/caption]
The chain is being bought by private equity investment firm Cherry Equity Partners through a pre-pack administration process.
A “pre-pack administration” is an insolvency process for a business to sell its assets before appointing administrators – it’s a way of selling a business to a third-party buyer.
The closures mean 190 jobs will be lost.
The majority of the closures will be smaller sites in suburban locations which have “become economically unviable due to continuing cost headwinds affecting the sector”, according to advisors Interpath.
However seven restaurants and more than 300 jobs will be saved by the deal.
Paul Moran, chief executive of Gusto Restaurants, said: “We are profoundly sorry to see six of our restaurants close and are tremendously grateful for the support of our staff and our loyal customers at these locations over the years…
“This investment marks an important step forward for Gusto, ensuring the future of the business and putting in place a strong and stable platform upon which we can start to grow the business again.”
Gusto currently has restaurants in these locations:
Alderley Edge
Birmingham
Cheadle Hulme
Cookridge
Edinburgh
Heswall
Knutsford
Leeds City Centre
Liverpool
Manchester
Newcastle
Nottingham
Oxford.
It’s not clear yet which restaurants are set to close but The Sun has asked and will update this article.
What does going into administration mean?
WHEN a company enters into administration, all control is passed to an appointed administrator.
The administrator has to leverage the company’s assets and business to repay creditors any outstanding debts.
Once a company enters administration, a “moratorium” is put in place which means no legal action can be taken against it.
Administrators write to your creditors and Companies House to say they’ve been appointed.
They try to stop the company from being liquidated (closing down), and if it can’t it pays as much of a company’s debts from its remaining assets.
The administrator has eight weeks to write a statement explaining what they plan to do to move the business forward.
This must be sent to creditors, employees and Companies House and invite them to approve or amend the plans at a meeting.
A Notice of Intention is used to inform concerning parties that a company intends to enter administration.
It is a physical document which is submitted to court, usually by directors aiming to prevent a company from being liquidated.
Like with a standard administration process, a Notice of Intention stops creditors from taking out any legal action over a company while they try and rectify the business.
Gusto offers classic Italian meals including pastas and sourdough pizzas.
It also hosts Italian-style bottomless brunches and pizza-making experiences.
Reviewers say it does “amazing food” and has “super friendly staff”.
Gusto is not the only chain that has fallen on hard times.
Restaurant and pub owners say they’ve been hit by a series of challenges in recent years, including the pandemic, the cost of living crisis and increasing taxes on businesses.
Recently a restaurant chain created by the founder of Wagamama collapsed into administration.
Busaba Eathai was forced to draft in administrators last week.
The Thai chain had operated 16 restaurants at its peak but this was reduced to 12 following a CVA in 2020.
Meanwhile, Oakman Inns & Restaurants said it would close six sites and transfer a further 12 as part of its administration.
The posh chain blamed the hangover from the pandemic and elevated interest rates for its troubles.
Plus, BrewDog announced it would close 10 sites last week – including its flagship branch in Aberdeen.
The pub chain already closed six sites at the start of the year following a £63million loss.
What is happening to the hospitality industry?
By Laura McGuire, consumer reporter
MANY Food and drink chains have been struggling in recently as the cost of living has led to fewer people spending on eating out.
Businesses had been struggling to bounce back after the pandemic, only to be hit with soaring energy bills and inflation.
Multiple chains have been affected, resulting in big-name brands like Wetherspoons and Frankie & Benny’s closing branches.
Some chains have not survived, Byron Burger fell into administration last year, with owners saying it would result in the loss of over 200 jobs.
Pizza giant, Papa Johns is shutting down 43 of its stores soon.
Tasty, the owner of Wildwood, said it will shut sites as part of major restructuring plans
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