Jamie Oliver’s flagship London Barbecoa restaurants have gone into administration as the Jamie Oliver Restaurant Group struggles to pay off its soaring debts.
The restaurant group currently owes £71.5m in debts. The majority of this (£41.3m) is owed in tax and overdue rent, with another £30.2m owed in loans and overdrafts, according to documents seen by the Sun on Sunday.
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The group also owes its employees £2.2m in unpaid wages.
With 12 of the group’s 37 restaurants set to close across the UK, 450 jobs are on the line.
Yet, the Jamie Oliver Restaurant Group Glassdoor page shows that, for the most part, employees are happy with the way that the business is currently being run.
The group has an overall rating of 3.8 stars from 68 reviews and 74 percent of employees would recommend the company to a friend, while 100 percent approve of chain CEO Jon Knight.
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By GlobalDataIn comparison, Las Iguanas and Strada, two UK-based chains serving a similar style and quality of food, have ratings of 4.1 and 2.5 stars respectively.
Likewise, there seems to be no recent increase in complaints by customers.
Barbecoa Piccadilly currently has a TripAdvisor rating of 4 stars. Of the 48 reviews left by diners since 1 January, the average rating has been 3.8, with the vast majority of reviews (23) rating the restaurant five stars.
Barbecoa St Pauls also has a four star rating. Likewise, of the 31 reviews left so far in 2018, 14 have been five star reviews. The average rating in 2018 works out at around 3.9 stars.
So it seems, things could certainly be worse for Jamie Oliver’s restaurant empire.
So what’s gone wrong for Jamie’s restaurant empire?
Oliver’s woes aren’t due to mismanagement, but a fall in consumer spending. Essentially, Jamie Oliver restaurants are going out of business and it’s our fault.
According to a Deloitte report last year, which surveyed 3,000 UK adults to found out what people are spending their money on, we’re simply spending less.
The report found that spending on almost every leisure activity, from attending live events to drinking in coffee shops, had declined since the previous year.
Falling spending hit the restaurant sector the worst. Spending on dining out declining by eight percent from 2016.
The fourth quarter of 2017 saw spending pick up, likely due to the Christmas period. Eating out was up three percent, but still down on 2016.
Simon Oaten of Deloitte previously told CityAM:
“The combination of rising inflation and lower wage growth is stretching disposable incomes and causing consumers to rethink their expenditure. It is no surprise that we are seeing UK consumers tightening their belts.”
This reflects in the Jamie Oliver group’s revenue. The group saw turnover fall 3.6 percent between 2016 and 2017, from £166.2m to £160.2m.
Likewise, pre-tax profits saw a sharp fall in that same period. The group reported a profit of £2.4m in 2016, followed by losses of £9.9m in 2017.
According to reports, profits were hit by increasing rent prices and labour costs, which is also part of the reason for Barbecoa’s imminent closure.
Background:
Two of London’s Barbecoa steakhouses were set to close. However, the celebrity chef has since bought back the St Paul’s Cathedral eatery from the group in a bid to save it.
However, the steakhouse in Piccadilly is likely to close.
This decrease in consumer spending isn’t only harming the Jamie Oliver group. According to the Guardian, an increasing number of restaurants ran out of money last year. Insolvencies in the industry climbed by a fifth, increasing from 825 to 1,000.
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