Wasabi has become the latest casual dining chain to resort to a company voluntary arrangement (CVA) to resolve its financial troubles.
The sushi and bento chain, which is backed by Capdesia, is to undergo “a financial and operational restructuring programme” involving extra funding from its investors.
It is continuing negotiations with its landlords over the level of rent on some of sites. It is understood that “a handful” of sites are likely to be closed, although job losses are being kept to a minimum.
The decision to pursue a CVA follows the appointment in May of restructuring advisers from KPMG to explore a strategic options, from tapping existing investors for funds to an outright sale.
Wasabi, which was founded in 2003, has 51 restaurants in the UK, 41 of them in London, and 1,500 staff. It also runs two sites under the Kimchee brand and five restaurants in America, although these are not thought to be affected by the CVA.
A CVA is an insolvency process that is typically deployed to shed loss-making or otherwise uneconomic sites and secure more favourable rent terms for others. KPMG said that Wasabi had been “profoundly impacted” by the lockdown measures.
It said the chain’s strong presence in London had made it particularly susceptible given “the likelihood of future trading continuing to be adversely affected by ongoing social distancing measures, the gradual return to the workplace of office workers in London and the reduction in tourism”.
Henry Birts, 48, chief executive, said: “Prior to the outbreak of the pandemic, Wasabi had been performing strongly on the back of the investment and operational improvements we had made during 2019. However, the extraordinary impact of Covid-19 on trading has meant that we now need to take additional steps to address our fixed cost base if we are to secure the long-term future of our business.”
He said that discussions with landlords were focused on securing “better alignment of the rents of certain sites in proportion with footfall and trading” and he was confident it could emerge from the proposed turnaround with “a stable platform upon which we can emerge from this difficult period”.