The Byron storyIn 2018, Byron underwent financial restructuring under a Company Voluntary Arrangement (CVA) administered by KPMG. The aim was to cut costs and combat the brand’s poor financial performance, which was attributed to changing consumer habits in the dining market as a result of Brexit. Two years and seventeen store closures later, it now operates from fifty restaurants and employs 1,200 people. So where the likes of Jamie’s Italian failed, Byron, via some savvy accounting, (and the closing down of its poor-performing restaurants), has lived to fight another day on the high street. Following the outbreak of COVID-19 in the UK and the subsequent closure of all non-essential retailers, Byron has sought the help of KMPG once again to help it through this period of economic uncertainty, however, it is also looking to the Government for financial help during this time:
Government (coronavirus) assistanceAccording to Sky News, Byron is keen to take advantage of the Coronavirus Job Retention Scheme and seeks to “furlough” a majority of its staff. However, the company’s 45m+ turnover and lack of investment-grade credit rating mean it can’t take advantage of another government-backed scheme, namely the Covid Corporate Financing Facility, (CCFF), which is offering qualifying UK businesses some 330bn’s worth of loans. Of course, Byron isn’t the only one trying to cushion the blow of this economic fallout. Countless other businesses great and small are assessing their eligibility for the Government’s support measures, which have, and continue to be announced by UK chancellor, Rishi Sunak. While the chancellor has already given restaurant chains?”a 12-month business rates holiday” and “VAT deferral” including “access to a separate grant scheme depending upon the rateable value of their properties,” a number have also decided to withhold their rents due to coronavirus.
Restaurant chains withhold rentBurger King, Carluccio’s and Yo! Sushi have all decided to withhold their quarterly rent payments that were due this week. Even global budget clothing retailer, Primark has also stated its intention not to pay rent due to the adverse economic impact of the coronavirus outbreak in the UK. While the announcement of governmental measures to support businesses during COVID-19 has been welcomed by businesses generally, for smaller enterprises with tighter cash flows, there are concerns the money from these schemes won’t arrive fast enough to save them.
Concerns for smaller retailers and businesses generallyOne sector that could be hit hardest by funding delays is hospitality. The trade body for the UK hospitality industry has already expressed concerns that many of its businesses, who face frequent rent payments, will flounder before they get access to the funding. While the Bank of England is providing loans for bigger enterprises, smaller businesses seeking help are reliant on the Corinavirus Business Interruption Loan Scheme for funding. However, the?scheme has already been causing controversy over a lack of clarity on its terms. A concern for some is the scheme (which has temporarily replaced the Enterprise Finance Guarantee), could follow its predecessor’s terms of requesting lenders to provide security for the loans such as their home. Todd Davidson, MD of insurance provider Purbeck, has voiced his concerns about the scheme, saying: ?We need clarity from the Government on this. Our concern is that UK entrepreneurs will in effect be providing a large portion of the ?330bn security pledged in favour of their lender. This means if their business fails, the lender will be able to claim their home and savings to settle the loan before they seek a claim through the CBIL scheme.”
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