Jamie’s Italian’s insolvency is ‘just the start for dining trade’

Celebrity chef Jamie Oliver’s British restaurant chain filed for bankruptcy protection on Tuesday, mainly due to increased competition and escalating rents in local commercial districts according to reports.

The insolvency will leave 1,000 people out of work.

Oliver wrote on Twitter “I’m devastated that our much-loved UK restaurants have gone into administration, I am deeply saddened by this outcome and would like to thank all of the staff and our suppliers who have put their hearts and souls into this business over the years.”

Financial firm KPMG, which will oversee the process, with all but three of the group’s 25 eateries will close. They include restaurants in the Jamie’s Italian chain, as will the more upmarket Fifteen, and steak house Barbecoa.

Tom Gardiner, Insolvency Practitioner at CVR Global, believes more dining chains could hit the buffers if they aggressively roll-out restaurants across the UK.

Gardiner, who specialises in the sector, thinks more could follow – tipped over by a tightening of the economy. Gardiner said “While people in the centre of cities may eat out nearly every night, in other parts of the country this is not the case – in fact the anticipated boom in mid-tier dining has now largely stalled – and this has proved fatal in the end for Jamie’s Italian – the roll out of their store portfolio hasn’t matched people’s appetite.”

“Eating out is no longer a priority for a lot of cash-strapped Brits, and when treat night does come around, many people are now turning to chains which are either more cost effective or distinctive in what they offer.

“This is a big warning sign for other restaurant chains out there that turnover is vanity, and profit is sanity – having impressive turnover numbers are fine but it is the profit that really counts, which is why restaurants need to be constantly reviewing income against costs relating to their rent, food, staff and business rates to ensure profit is being generated.”

“You only have to look at other “nice-to-have” industries such as travel and leisure to see how people are clearly being prudent in how they spend they money. Often eating out is the first expense to be cut when people are looking to trim their budgets.”

“Our thoughts are with the employees of Jamie’s Italian and we hope that the business can be rescued and as many jobs as possible saved.”