This autumn, the English courts approved a restructuring of Cineworld, the cinema group that operates at leisure locations across the UK. The case followed a challenge by two objecting landlords and has potential read across for the entire hospitality and leisure industry. It highlights use of a nascent type of restructuring method – the restructuring plan (RP) – that has also been used by Prezzo and Revolution Bars Group, among others, recently. 

This method for court-supervised compromises with both secured and unsecured creditors is an increasingly powerful tool for restructuring the debts of a company, and some would argue marks a move away from company voluntary arrangements (CVAs) to an RP era. This could prove particularly pertinent at a time when it seems a rising number of companies face the need to right-size operations and overheads, as a necessary step towards securing long-term viability, especially in the wake of the recent Budget. 

The Cineworld case showed that this process comes with some complexities, including elements that had never been tested in court before. But in simple terms, and unlike a CVA, an RP can be approved by a court in a scenario whereby the majority of creditors are not necessarily in favour – and it nevertheless becomes binding on all creditors.

Cineworld was severely impacted by the pandemic and government restrictions. While a reorganisation led by Cineworld’s sister company in the US, Regal Cinemas, under Chapter 11 of the US Bankruptcy Code in 2022, provided some liquidity and headroom in relation to the group indebtedness, it did not address Cineworld’s lease liabilities over its cinema sites – a significant number of which were “over-rented” (with contractual rent in excess of fair market rent). 

This factor, together with difficult trading conditions, exacerbated by the screen actors’ and writers’ strikes in 2023, resulted in Cineworld continuing to suffer severe difficulties. As the group faced into the summer, it was clear that, with the September quarter rent falling due, insolvency would have been unavoidable, and intervention was required.

Working with the global group board, we assessed what alternative options were available. It became clear that, without an RP, the most realistic alternative would be a sale of the key Cineworld assets to Regal. However, this would need to be affected via a potentially value destructive insolvency event, such as administration, and so instead, it was considered appropriate to pursue an RP. The terms of the RP would primarily focus on rebasing rents on potentially viable sites in line with the market and exiting sites that were unlikely to be viable even at a true market rent. Intercompany loans would also be written off, financial creditors would also give concessions to aid cash flow, and other historic liabilities would also be compromised.

A total of 32 classes of creditor were convened across the Cineworld restructuring plans. The secured term loan lenders and secured intercompany lender approved the plans. Among the classes comprising landlords, general property creditors and business rates creditors, results were mixed: overall, 12 classes approved, and 20 classes voted against the plans. 

What was unique about this case – and arguably the cause of some controversy – was that Cineworld previously consensually renegotiated some of its UK leases in 2023, before this latest process. In exchange for rent reductions at that time, Cineworld entered into several side letters with the tenants agreeing that, if Cineworld entered into a RP or CVA, then these leases would be excluded from the process. However, Cineworld’s RP sought to impose additional impairments beyond what had been contractually agreed in 2023 – on the basis that the sites subject to these side letters were still over-rented, even after the reductions associated with the side letters. Not including these landlords in the RP might have been considered to be favourable treatment when compared with other landlords, which the UK courts typically do not allow.

The court accepted Cineworld’s evidence that, at the time of the side letters, the company had underestimated a number of factors. For example: the impact of the actors’ and writers’ strikes on the pipeline of films; the increase in the national living wage (higher than anticipated); and lower-than-anticipated cinema attendances. The court accepted that, accordingly, the deterioration of the UK group’s trading performance since those side letters had been greater than projected. 

Aside from this headline issue however, there are several other key takeaways from the process. One is the importance of companies assessing the feasibility/benefit of an RP as early as possible, and then working up a realistic timetable that allows for slippage/delays to ensure that the plan can be sanctioned in time prior to an (often critical) upcoming rent quarter date. This is because, unlike other restructuring processes, the lead time for implementation of an RP can be several months. 

Linked to this point, a company’s financial forecasts are key to determining the terms of the RP, and therefore need to be robustly tested and agreed at the outset of the process. It is therefore important to socialise the forecasts with all internal stakeholders as soon as possible in order to achieve a consensus, and to prevent later delays.

In terms of that preparation, it was essential to be as comprehensive as possible and to demonstrate clearly to creditors and the court why the RP would fix the fundamental problem. Preparation of pre and post RP business plans were vital to demonstrating this. The case also highlighted the need for transparency – most RPs are subject to some level of challenge by creditors, who will have a right to review key information that informs the need for the RP – and so everything should be prepared assuming as though opposing creditors will get access to it. Key decisions should be recorded contemporaneously. 

Given the RP process is relatively new, companies can be creative and innovative with terms to achieve the desired outcome – just because it hasn’t been done before, doesn’t mean it isn’t possible. Here, we were able to create RP terms that would have allowed some cinemas to remain open, that would otherwise have closed if an existing RP precedent had been followed.

A fundamental component of an RP is that it must ensure that creditors are no worse off than the “relevant alternative” if the RP was not implemented – in this case, that was identified to be the administration process mentioned earlier. Robust evidence of why the “relevant alternative” is what it is stated to be is therefore vital, and in this case, it was supported by witness statements from all major stakeholders. The case evidences again that there is a rescue culture in the courts and that, if there is a fair plan, they will look to endorse it, whether the majority of creditors back the proposals, or not.

We have recently had cause to plan a complete re-lay of one of our kitchens. For those who are interested, it all comes down to the extraction flow rates. We have some of the most crucial equipment, like the chargrill, currently operating under the slowest flow rate in the kitchen (one cubic metre per second). We need to relocate it to an area where the flow rate is 2.5 metres per second.

 

And, of course, whenever there is a project like this underway, there is a real opportunity to make wider improvements to the kitchen, which is exactly what we intend to do. It has been a long time since I worked with Deterministics, a company that measures everything to death, focusing on process control, productivity, operations, design engineering and analytics for the restaurant industry. For me, the detail was not always the most useful, but the process was, and still is. In fact, we are using the process to drive maximum productivity in the kitchen. It is a win-win, as it also makes life easier for our kitchen team.

 

At the moment, we have ended up feeling a bit like a Blue Peter set rather than a restaurant business. But it is really good. We have taken every session, every style of food and every number of staff on shift and mapped out exactly where they have to go to complete their tasks. We have tried to minimise walking where there are few chefs and given each team member the right workspace when we are at maximum. Not only does this structure force the kit to go in the right place, but it also forces the fridge layouts to be incredibly well thought through, which was previously an issue in our business.

Fridge layouts are the most poorly executed areas for us – my big frustrations stem from there being nothing in a line fridge, or raw items being there. It is also difficult when each chef lays out their section differently and spends half an hour relaying their section because that is how they prefer to work. We are aiming to eliminate all these items in our new kitchen.

 

We are also investing in a large hot holding oven, to both drive capacity from our chefs and, in truth, to drive quality where they have developed substandard workarounds. I think hot hold ovens, if used well, make such a difference to speed, with only marginal drops in quality. But beware the chef cooking everything off at ten and chucking it in the hot hold!

 

Optimising prep space has been another key focus for us when planning the kitchen. We have decided to build in dedicated prep areas so that chefs can drop off the line when it is not too busy and crack on with some prep, and then step back on the line when a ticket comes in. With the new wage rates coming in, we must start moving to this model to drive efficiencies where we can.

 

The final area we have looked at is a drop off space for pot wash. The reality is, we cannot justify having a pot wash when it is quiet, so we need to have the capability to let the plates pile up to a certain point. 

 

There really is a lot to think about when it comes to kitchen design, and I think getting it right is a real skill. Each time a menu changes, it has an effect on how the kitchen is laid out and functions. If we are not careful, a really well thought out kitchen evolves into a poorly laid out, or poorly managed kitchen. 

 

I still have the image in my head of a really big kitchen, with the pass at one end of the line and the fryers at the other end. Think about the poor chef, who either has to work up and down the line to make a portion of chips, or better yet, think of the poor customer who has to eat a portion of chips that has been held with ten others under the lights to sweat. When we do, we realise how important kitchen details are. 

 

It is such a challenge to keep up to date with kitchens, but it is one of the many challenges that is worth the investment. The extract issue may have forced us to adjust, but the process will now add loads of value to the quality and efficiency of our business.

As we step into 2025, the hospitality world is ramping up with even more revolutionary technology. From robotic chefs to artificial intelligence (AI) menu personalisation and enhanced loyalty programmes to transformational self-service, if you haven’t already, now’s the perfect time to dive in and ride on the technology wave. So, what will we see more of in 2025?

 

Personalisation through AI and data: Advanced AI and data analysis systems enable hyper-personalised customer experiences, enhancing satisfaction and loyalty. From personalised menus to remembering previous orders, this level of automation is only going to improve the ways we engage and delight customers.

Self-service ordering: The rise of self-service hasn’t slowed down. From self-service kiosks to QR code ordering, passing the control to the customer is not a trend, it’s an ordering must-have. With self-service kiosks adding multiple ordering benefits for customers, and sales and efficiency incentives for operators, self-service technology is becoming an even smarter solution.

Loyalty strategies: Innovative loyalty strategies are becoming a key ingredient in the customer journey and an essential way to encourage repeat customers. Technology is helping make loyalty easy in 2025 as the experience for a customer to identify themselves is super simple and friction free, with fast redemption of offers.

Scalable solutions: Operators are looking for technology platforms that offer scalable and modular solutions to grow with their business success. With technology now being super flexible, it also means you have scalable solutions that are tailored to your business, so you can future proof your operations.

Best of breed operations: Open API platforms that integrate multiple software providers are revolutionising operations, streamlining workflows and enabling operators to deliver exceptional service. This approach means businesses can pick and choose specific integrations and build their ideal technology stack, depending on their needs and goals.

Manage multiple menus: Modular technology provides restaurants with the ability to expand their menus across multiple ordering and delivery channels and multi-site operations. This gives you the opportunity to leverage all customer touch points for maximum profit.

Ghost kitchens: These virtual dining concepts are expanding, providing niche culinary experiences solely through delivery, serving up both convenience and novelty.  These concepts are not only cool, but ghost kitchens also make us all question what other concepts will be next.

Digital first approach: Many new operators entering the market are embracing technology from the start, making sure they are set up and ready to maximise on technology advantages, and embrace new technology as it develops.

Technology transformations: Although change is hard, I've seen many businesses go through technology transformations this year, and that’s only going to grow in 2025. Whether that is a full overhaul of operations or a focus on a specific side of the business, like front of house, the technology transformation is hard to avoid for the modern hospitality business.  

Multiple payment solutions: From bill splitting to QR code self-service payment, the way customers can pay is becoming more efficient, with many operators offering multiple options, putting payment power back into the hands of the customer. This is working especially well for quick service restaurants that appreciate customers’ need for speed and delight at convenient and easy ways to pay.

Working with our Kurve customers, I’ve seen that technology is providing savvy, brand conscious operators the opportunity to track, automate, monitor and improve every aspect of their operation and customer journey, becoming an integral part of their brand success. This investment in technology is going to become even more important in 2025 and we’re excited to be part of this exciting technology revolution. 

As 2024 winds down and 2025 looms large, here’s the hard truth: businesses that focus on social capital, not just KPIs, are the ones that will crush it. At Purple Story, we know this first hand. Social capital isn’t some fluffy HR term – it’s the real engine driving growth and profit. If you’re still fixated on processes and targets, it’s time to hit reset. The future is about relationships, and now’s the time to invest in them.

 

Let’s get real: most senior leaders are obsessed with data, metrics and the next quarter’s targets. But here’s the thing; while performance targets matter, they’re not everything. What happens when your team doesn’t trust each other? When your customers aren’t connected to your brand? Sure, you might hit your targets, but you won’t create sustainable success. That’s where social capital steps in and – spoiler alert – it’s how you make money.

 

Social capital is the trust within your team, the connections you build with others and the influence you create. It’s the secret sauce behind high-performing teams and businesses that thrive when things get tough. At Purple Story, we’re not just talking about it, we’re living it. Our whole business is built on relationships. We give people a taste of what we do with free workshops, online hangouts and digital content, because once you experience the power of social capital, you’ll see how it’s not just about trust, it’s about boosting your bottom line.

 

Want to win in 2025? Then start prioritising social capital. Strong relationships aren’t just “nice-to-haves” – they’re the fuel that drives profit. When trust is flowing, decisions get made faster, teams collaborate better, customers stay loyal and opportunities get seized before your competition even knows they exist. Social capital isn’t just what keeps the business running, it’s what makes the cash roll in.

 

So, how do you start building social capital? Here’s the playbook:

1. Be a connector: Don’t wait for relationships to magically form, create them. Introduce people, spark conversations and open new doors. Every connection is a potential opportunity.

2. Be consistent: Social capital isn’t a one-time thing, it’s a long-term investment. Keep at it – small, regular actions add up to big results and bigger profits.

3. Give first: Focus on offering value, not just getting something back. Share your knowledge, lend a hand and invest your time. You’ll be shocked at how fast the goodwill comes back to you.

It’s easy to get caught up in the daily grind, but if you want long term success and a business that makes real money, relationships need to be your number one priority in 2025.

 

At Purple Story, we’ve already put social capital at the centre of everything we do, and the pay-off in growth and profitability speaks for itself. We’re building a movement of people who know that relationships drive growth, and I challenge you to do the same.

 

So, as 2024 wraps up, ask yourself: What relationships can I start building today? Get going now. Don’t wait for the new year, make social capital the foundation of everything you do. Because, if you’re not focusing on relationships, you’re leaving money on the table.