Wed 26th Aug 2020 - Wahaca to close ten sites, explores CVA Wahaca to close ten sites, explores CVA: Mexican restaurant brand Wahaca is to close ten sites and explore a company voluntary arrangement (CVA). The company stated: “The past four months have seen the depletion of significant cash reserves – spent looking after team and suppliers during the enforced closure of hospitality businesses and resulting in the company having had to raise new equity to allow it to continue with reopenings and return to growth. Rents, as a percentage of sales, in city centres, where the majority of Wahaca restaurants are located, had already increased dramatically – which, coupled with the uncertainty of the post-lock-down trading environment, would make a number of sites untenable. It will only be possible to reopen sites that, even with the likelihood of significantly reduced sales, will not lose money – to avoid putting the entire business and every job at risk. As a result, ten Wahaca sites will not be reopening, and the business will be working with landlords to manage the impact of this decision. The group is exploring various options to facilitate this plan, including considering a CVA. Jobs affected by sites not reopening will be retained wherever possible, with work already underway to ensure as many of the affected team members as possible are able to be redeployed elsewhere in the business. Following this extremely difficult decision, and with the principles of new finance now agreed, the group will now positively focus itself on the future by continuing with its reopening programme and an ongoing dedication to its core offering of sustainable, high quality, fresh food and a fantastic customer experience – with the aim of strengthening the position of remaining sites and returning to growth as the market recovers.” An email to staff this morning (Wednesday, 26 August) from Mark Selby on behalf of himself and co-founder Thomasina Miers stated: “The last time I spoke to many of you about what the future looked like was in February when we had just launched our new values with huge energy and excitement, growth in our restaurants was back to amazing levels, we had a new restaurant lined up to open and Wahaca had just been voted London’s favourite restaurant brand in the latest YouGov poll. We had also just returned from Mexico with a whole lot of the team, filling them with the inspiration that Tommi and I have for the country, its people and above all its amazing food. We were on a high. Then covid hit and our worlds were turned completely upside down. However, even in the wake of covid, the incredible passion and determination you have all shown in supporting your teams, your families and charities around the UK has been awe-inspiring. I have never seen a group of individuals come together and achieve so much in such difficult circumstances and I thank you from the bottom of my heart. That said you will know covid has left destruction in its path with businesses burning through cash stored away for growth. We have done everything we can to protect our cash position while also doing everything in our power to protect our teams and all of our suppliers. I am very proud no trade supplier, however small, has gone unpaid, and all of you are aware of what we have been doing with regards to your own situations. That said, we are not immune from what covid has thrown at the world, in particular at the hospitality industry, and the cash we had for lining up new sites and growth has now gone. Our bank, NatWest, and our shareholders have been unbelievably supportive of us as a business and I thank both of them for their support and confidence in what we want to achieve. Tommi and I set out to prove 12 years ago that you could build and grow a truly sustainable business while introducing the UK to a new type of delicious cuisine, which the majority did not understand or know. We have achieved that in becoming the UK’s first carbon neutral restaurant business, winning the Sustainable Restaurant Group of the year awards for countless years and, as mentioned, recently being voted as London’s favourite restaurant brand. We now source all of our meat from Britain – free range pork, higher welfare chicken, grass-fed beef and truly sustainable fish as well as introducing organic veg into our tacos. We have achieved so much and Tommi and I are deeply, deeply proud. We will go on to do even more in the future. I am very sure of that. However in order to achieve this, and to secure investment for our future, we are going to have to take a step back in order to then move forwards again. It is with great sadness that I write to say we will not be reopening ten Wahaca restaurants – Bluewater, Bristol, Brixton, Charlotte Street, Chichester, Manchester, Liverpool, Kentish Town, Southampton and St Pauls. I apologise from the bottom of my heart to all of our teams who will be affected by this. Wherever we can we are going to try and save jobs. We have created a new ambassador role in each of our restaurants and the people team are working hard on looking at where and how we can move people around. They will be in touch with you in the next few days as will your line managers with information on where you can turn, what support there is within the business and we have also set up a hotline for anyone to reach out for support getting through this. All these details will be with you in the next few days. These have been the hardest decisions of our lives and we have looked at this from every angle with the sole objective of looking after as many of our teams and restaurants as we can without having to close the business for good like so many others have had to do. Pre-covid restaurant rents in city centres, where the majority of our sites are, relative to the sales achievable in those areas had become hugely overpriced. In the past five years some of our rents had gone up by 70% or so as well as business rates going up by 30% to 40%. We were managing fine and we were growing so we could stomach this, although it did hurt. In the new world, where there is such huge uncertainty, many of those sites now look in the short and medium term untenable and we would put the whole business at risk if we were to carry on trading in them. Every business at the moment has had to make what six months ago would have been completely unthinkable decisions. We are an amazing business and we have kept utterly true to our sustainable roots throughout. Tommi and I, as I know you know, are deeply passionate about Mexican food and our people and we refused to take the line of dumbing down the business, not investing in our people or compromising on what makes our food and customer experience so great. That isn’t Wahaca and we simply couldn’t go there. So we have had to make the hugely difficult decision to trim the business from a site point of view so we can come through this even stronger with our remaining sites than when we went into it. I am 100% confident we will achieve that, however it will be at a huge sacrifice for those team members affected, many of whom have been the backbone of our business over the past 12 years. This will leave a scar that will take many years to heal and I want to thank all of you who have worked so tirelessly on achieving our vision. As I said in the title, this is genuinely the hardest email I have ever had to send and I am truly sorry that you are all recipients of it. I apologise unreservedly to those affected and once again thank you for everything you have done for us. While it is little conciliation please know that you have helped make Wahaca into the much-loved business it is today and you will be very much part of its history and its DNA. I do believe we will go on to achieve amazing things but today we pause and say thank you to all the amazing people leaving us. We will truly miss you all and ask you to please stay in touch. I will be in contact very soon with more information around the reopening of the rest of our sites and please, as ever, let me know if you have questions and I will do my best to answer them.”