Asda’s new owners take over Leon fast food chain | Food industry
The billionaire brothers behind gas station company EG Group bought fast food chain Leon Restaurants for £ 100million, just months after acquiring supermarket chain Asda.
EG Group, led by Mohsin Issa and Zuber Issa, has acquired the 70-person restaurant chain, founded in London in 2004 by John Vincent, its managing director, Henry Dimbleby, Boris Johnson’s national food czar, and the chef Allegra McEvedy, both of whom left the company a few years later.
The deal will result in payments for the trio: Vincent, who is leaving, is expected to earn £ 15million with his 15% stake in Leon, which is named after his father, while other private shareholders, including the two other founders hold 15%. between them.
Leon, which employs 700 people, was majority owned by two private equity firms, Active Partners and Spice private equity, with respective holdings of 30% and 40%.
Healthy eating advocates Vincent and Dimbleby coined the concept of a ‘naturally fast meal’ for Leon, and also developed a school feeding plan for the government in 2013. They met at the management consultancy firm Bain and Company, where they bonded on a “dislike prefabricated sandwiches served in neon-lit refrigerated cabinets,” according to the Léon website.
Last July, Dimbleby’s report on a new national food strategy, commissioned by the government, recommended that up to 1.5 million more children in England receive free school meals to help fight a growing poverty crisis food and unhealthy diet.
The Issa brothers, who rented their first gas station in 1999 and now have more than 6,000 in 10 countries, have embarked on a buying wave, adding new food companies to their portfolio. They agreed to acquire Asda for £ 6.8bn last October, although the takeover has yet to be approved by the competition watchdog, with a move expected on Tuesday, and have made a bid for Caffè Nero. They had even hoped to buy the Topshop fashion chain.
In January, EG recruited former Marks & Spencer boss Stuart Rose as chairman to bolster its corporate credentials at a time of rapid expansion, which has left the company in debt of more than £ 7 billion. In October, the group’s auditors, Deloitte, resigned, fueling concerns about EG’s governance and management.
Leon has 42 company-owned restaurants in London and other major UK cities, as well as 29 franchise-operated locations in transport hubs, primarily airports and train stations, in the UK, Netherlands, Ireland, Norway, Spain and Switzerland.
Only six outlets are in gas stations, a number that is expected to increase under Leon’s new owners. EG plans to open around 20 Leon sites per year from 2022, including a number of drive-ins.
EG, based in Blackburn and 50/50 owned by the Issa brothers and private equity group TDR, already operates more than 700 food outlets in the UK and Ireland. As franchise operators, the Issas set up Starbucks, KFC, Burger King, Greggs, Cinnabon and Subway branches on their forecourt and opened the UK’s first Starbucks drive-thru in 2010. They said: ” Leon is a fantastic brand that we have. long admired.
EG is committed to retaining Leon’s staff and management team, and will also retain its headquarters in Copperfield Street, London, for at least 12 months.
Vincent said: “In some ways it is a sad day for me to separate from the company I founded 17 years ago on Carnaby Street.” He said he had come to know the Issa brothers over the years and was “confident under the new owner the brand will flourish and attract even more a wider clientele, especially outside of London” .
EG is also believed to be getting closer to Caffè Nero, having bought out some of the debts of the ailing coffee chain. He bought around £ 140million in loans from Swiss private equity firm Partners Group through investment bank Morgan Stanley, the Sunday Telegraph first reported. If Caffè Nero were to default on its debts, EG would be in a good position to take control. The chain also has £ 145million in senior bank debt due next year.
Partners have reportedly written to Caffè Nero boss Gerry Ford to express concerns about his finances, especially if the coffeehouse chain, which has not filed accounts nearly 11 months after the end of the year, can continue its activity.
However, Caffè Nero said: “We have had successful winter and spring trade and are generating positive cash flow and are ahead of forecast for the past five months. We don’t anticipate any engagement issues with our screenings over the next 12 months and look forward to an even brighter future after May 17th, when we fully open our cafes to the public.
EG’s offer for the 800-person coffeehouse chain was rejected in November and Caffè Nero instead sought a voluntary corporate deal, a form of insolvency that allows retailers to cut rents and shut down. some stores. The CVA was passed with the support of most Caffè Nero owners, but nine, mostly smaller owners, were unhappy and filed an EG-funded legal challenge. Eight would have settled with Caffè Nero but one still wants to go to court. EG declined to comment.