Tasty plc, the restaurant group behind the Dim T and Wildwood brands, is looking to close 20 of its sites and secure new funding in order to avoid collapsing.
The London-headquartered group, which is listed on AIM, currently operates 54 locations across the UK.
Under its proposed restructuring plan, 20 loss-making sires, of which two are currently closed, would be shuttered.
Tasty plc is also seeking a loan agreement for up to £750,000 to fund the plan and provide additional working capital to “stabilise the company” during its current financial year.
The group added that its plan “should enable significant EBITDA improvement of £2.1m between FY 2023 to FY 2025 through site rationalisations and other tangible cost savings”.
Dim T has restaurants in London and Hampshire while Wildwood has sites in the capital as well as the East Midlands, East of England, North West, South East, South West, Wales, West Midlands and Yorkshire.
“In the best interests of the group”
On its restructuring plan, Tasty plc said: “Following a period of external challenges which have impacted the company’s business and trading performance, the board has explored strategic and restructuring options available to it.
“The board has concluded that it is in the best interests of the group to propose a restructuring plan (via a newly formed deed poll company) alongside a number of additional measures to be implemented across the group, to restructure the group to return it to profitability and secure its long-term future, in order to deliver the best outcome for stakeholders.
“In order to fund the potential restructuring plan and provide additional working capital for the group, the board has concluded, having undertaken a detailed review of the group’s financial forecasts and expected trading performance, to proceed with the loan.
“Without the additional funding provided pursuant to the loan agreement and without the restructuring and cost savings delivered through the proposed restructuring plan (including exiting loss-making sites), the board anticipates that the group would need to raise additional funding by September 2024 which is expected to be very difficult to achieve given the anticipated loss-making performance under the group’s current structure.”
Tasty plc has agreed a Time to Pay arrangement with HMRC in relation to PAYE and VAT arrears of £2.1m which the group said are expected to be paid in full by April 2025.
“Difficult trading conditions”
For 2023, Tasty plc said it expects to report a revenue of around £49.6m, up from £44m, as well as an EBITDA loss of approximately £900,000 having lost £2.7m in 2022.
On its results, the company said: “The group has made reasonable progress since the year end and despite difficult recent trading conditions, management continue to navigate through challenging times to mitigate cost rises and lower trading performance.
“As previously reported, the cost-of-living crisis, transportation strikes, and interest rate rises continued to significantly impact FY23 revenue and inflationary pressure on labour, food and utilities continue to adversely affect profitability.
“The group’s financial performance has been inhibited by a tail of underperforming sites, despite efforts at improving operational performance. H2 2023 like-for-like revenue was +6.6 per cent compared to +1.4 per cent in H1 2023.
“However, trading has been challenging in FY 2024 and current like-for-like revenue is -2.1 per cent.
“The group has driven operational efficiencies by menu engineering, reducing staffing levels, amending opening hours and temporary closures during quieter periods.
“The group has reduced overhead costs and cash outflows throughout the business, including significant redundancies during the pandemic, in addition to also reducing capital expenditure.”
Tasty plc’s shares have almost halved in value over the last 12 months while the company has a market capitalisation of £1.5m.