Lyons has announced it will be closing a number of its restaurants and cutting jobs as part of a major restructuring of the high street food chain.
The company has appointed Quantumma as administrators after Leon’s original co-founder John Vincent reacquired the company from Asda last month.
The move puts the future of its 71 worst-performing stores at risk, but no closures have been confirmed yet and all stores remain open.
The company employs about 1,000 people and Lyons did not say how many would be affected, but said he would try to find jobs in the stores that remain open first.
Mr Vincent said that after an initial review of the company, the “immediate priority” was to close the “most unprofitable restaurants”.
“In many cases we have found other brands to take our place, and in others we will ask landlords to withdraw leases and find better-suited operators,” he said.
Leon’s has also developed a program with Pret a Manger to help employees who cannot land jobs at other Leon’s outlets, through which affected employees can apply for jobs at the coffee chain.
The company plans to work with Quantuma in the coming weeks to discuss plans with the landlords and work on options for the future of Lyons.
Mr Vincent said he believed the company had deviated from its core values under the leadership of EG and Asda, but he was also sympathetic to the challenges faced in running a “healthy” fast food chain.
He said, “Over the past two years, Asda had bigger fish to fry, and Lyons was always a business that they didn’t feel was in line with their strategy.”
“If you look at the performance of Lyon’s peers, you’ll see that everyone is facing challenges – companies are reporting significant losses due to changing working patterns and increasingly volatile taxes.”
Asda has previously said selling Lyons back to Mr Vincent would allow it to refocus on its core retail operations, which include everything from its supermarkets to petrol forecourts.
Asda has been contacted for comment.
Lyon also attributed its current issues to internal challenges, changing work patterns due to the Covid pandemic and tax increases – all of which have impacted the broader hospitality sector.
Mr Vincent said the government needed to review the tax burden placed on the hospitality industry.
He said, “Today for every pound we receive from the customer, about 36p goes to the government as tax, and about 2p goes into the hands of the company. That’s why most players are reporting big losses.”
Known for serving his meals in cardboard boxes with brown rice and fresh herbs, Leon has said that his mission is to prove that it is possible to serve fast food that “tastes good but is also good for you”.
It opened its first branch in London in 2004, and at the time it stood out against the fried chicken, burgers and chips menus of its rival fast food chains.
Lyon’s administration process comes after Pizza Hut’s UK operator DC London Pie announced it was closing 68 restaurants and 11 delivery sites in October, leaving more than 1,200 staff unemployed.
The administrators said the DC London pie had been hit by a combination of “challenging trading conditions and increased costs”, including “tax-related obligations”.
