Wildwood operator Tasty unveils plans to exit 20 loss-making sites after ‘challenging’ start to FY 2024: Wildwood operator Tasty has unveiled proposals to exit around 20 loss-making sites as part of a restructuring plan after a “challenging “ state to its new financial year. The group said it plans to enter into a £750,000 loan agreement to fund the restructuring plan and to provide additional working capital, “to stabilise the company in FY 2024 and to meet new opportunities in the sector in FY 2025 beyond existing operations”. The loan agreement is with Will Roseff, a UK-based high net worth investor, chartered accountant, and director and shareholder of bet365. It comes as Tasty said it expects to report FY 2023 revenue of approximately £46.9m (2022: £44.0m), gross profit of approximately £34.1m (2022: £31.4m) and an Ebitda loss of approximately £0.9m (2022: loss of £2.7m) as the cost-of-living crisis and interest rate rises continued to significantly impact revenue and inflationary pressure on labour, food and utilities continue to adversely affect profitability. Tasty said while reasonable progress has been made since the year end, performance continues to be inhibited by a tail of underperforming sites, despite efforts at improving operational performance. Second-half FY 2023 like-for-like revenue was up 6.6% compared with 1.4% in the first half of FY 2023. However, it said trading has been challenging in FY 2024 and current like-for-like revenue is down 2.1%. The company stated: “The use of a restructuring plan is considered the most effective means to reorganise the group to return it to profitability and secure its long-term future. The proposed restructuring plan, if sanctioned, should enable significant Ebitda improvement of £2.1m between FY 2023 to FY 2025 through site rationalisations and other tangible cost savings. Discussions with stakeholders likely to be affected by the potential restructuring plan will commence in the coming days. 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. 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. The restructuring plan, if implemented, will affect the group, which holds 54 sites comprised of 43 Wildwood, six dim-t branded sites, two non-trading sites and three sub-let sites. The current expectation is that the implementation of the restructuring plan would enable the company to exit the leases of certain loss-making sites (currently anticipated to be 20 loss-making sites, of which two are currently closed) and compromise the claims of a number of non-critical unsecured trade creditors. Following completion of the loan agreement and restructuring plan, the board expects the group to be operating 30 profitable restaurants with FY 2024 Ebitda expected to be £0.3m. Revenue of approximately £33.4m and cash generation of approximately £1.3m is expected in FY 2025, with the loss in FY 2023 of £0.9m expecting to improve to a £1.2m profit in FY 2025. The group has agreed a Time to Pay arrangement with HM Revenue & Customs (HMRC) in relation to PAYE and VAT arrears of £2.1m, which are expected to be paid in full by April 2025. HMRC is excluded from the restructuring plan and continues to be paid in the normal course of business.” Creditors are expected to vote on the plan later this month. The company said the group's audit is progressing well, and subject to the sanctioning of the restructuring plan, the company expects to announce FY 2023 results and publish its FY 2023 annual report and accounts in June 2024. Tasty features in the Premium Club Turnover & Profits Blue Book, the next edition of which will be released on Friday (12 April) and features 901 companies. Tasty’s turnover of £46.9m is the 210th highest in the database. The Blue Book ranks companies by turnover, profit and profit conversion, listing directors’ earnings for the past five years. Companies can now have an unlimited number of people receive access to Premium Club for a year for £995 plus VAT – whether they are an operator or a supplier. The single subscription rate is £495 plus VAT for operators and £595 plus VAT for suppliers. Email kai.kirkman@propelinfo.com to upgrade your subscription.