Leon has announced it will close about 20 of its restaurants and cut jobs as part of a major restructure of the High Street food chain.
The company has appointed Quantuma as administrators after Leon’s original co-founder John Vincent reacquired the company last month from Asda.
The move places the future of the worst-performing of its 71 stores at risk, but so far no closures have been confirmed and all stores remain open.
The company employs about 1,000 staff and Leon has not said how many workers will be affected but added it would try to find jobs in the stores that remain open in the first instance.
Mr Vincent said the company was losing about £10m a year and 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 replace us, and in others we will be asking the landlords to take the leases back and find better suited operators themselves,” he said.
He said customers “will likely see big changes on the menu from next spring”.
Leon has also developed a programme with Pret A Manger to help staff who cannot take jobs in other Leon outlets, through which affected staff can apply for jobs with the coffee chain.
The company’s plan is to work with Quantuma over the coming weeks to discuss the plans with landlords and work out the options for Leon’s future.
Mr Vincent said he believed the company had drifted from its core values under EG and Asda’s leadership, but he was also sympathetic to the challenges they faced running the “healthier” fast food chain.
“In the last two years, Asda had bigger fish to fry, and Leon was always a business they didn’t feel fitted their strategy”, he said.
“If you look at the performance of Leon’s peers, you will see that everyone is facing challenges – companies are reporting significant losses due to working patterns and increasingly unsustainable taxes.”
Asda has previously said selling Leon back to Mr Vincent would allow it to re-focus on its core retail operations, covering everything from its supermarkets to petrol forecourts.
Asda has been contacted for comment.
Leon also blamed its current issues on internal challenges, changing work patterns driven by the Covid pandemic and tax increases – all of which have affected the broader hospitality sector.
Mr Vincent said the government needed to review the tax burden it had placed on the hospitality industry.
“Today for every pound we receive from the customer, around 36p goes to the government in tax, and about 2p ends up in the hands of the company. It’s why most players are reporting big losses,” he said.
Known for serving its meals in a cardboard box with brown rice and fresh herbs, Leon has said its mission is to prove that its possible to serve fast food that “tastes good but does you good too” .
It opened its first branch in London in 2004, and at the time stood out against the fried chicken, burger and chips menus of its rival fast food chains.
Leon’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, making more than 1,200 workers redundant.
Administrators said DC London Pie had been hit by a combination of “challenging trading conditions and increased costs”, including “tax-related obligations”.
