The Business
The Paramount Restaurants business (“Paramount”) was head quartered in London and comprised a UK group of 38 owned and operated restaurants under the owned brand names of Chez Gerard, Brasserie Gerard, Caffe Uno and Bertorelli.
When Icknield became involved, the businesses were producing a top line of £40m but an EBITDA loss after central costs.
Paramount was owned by a syndicates of banks who were also the secured lenders following a financial restructuring. Previously the group had been owned by a private equity firm who had taken the listed company Paramount Restaurants plc private.
There had been a number of changes in management at Paramount over the past few years. The most recent strategy had been to sell some of the restaurants to fund the group’s cash requirements and create sufficient liquidity to reinvigorate the brands through investment. Disposals had been achieved, but the cash raised had now been absorbed by trading and one off costs.
Key Icknield achievements
- Steered the board, management and lenders through the options for the business
- Introduced an Operations Director who drove trading improvement
- Achieved a 50% head office cost reduction within 2 months
- Completed a financial restructuring to reduce debt and create a viable platform for the business as well as supporting the signing of statutory accounts
- Brought in resources to manage cash and avoid the forecast need for additional funding
- Worked with advisers to identify purchasers to dispose of the majority of the restaurants to other restaurant operators
- Provided the banks with an exit
The Team
Steve Smith was appointed Executive Chairman at the end of July 2011 after five months as a non-executive director.
Shahin Gulamali assisted in the creation of restructuring proposals.
Icknield also provided cash management services prior to disposals occurring.
Icknield introduced an Operations Director to the business with a brief to halt the declining revenue and EBITDA.
The Turnaround
Following Steve Smith’s appointment as executive chairman, Paramount adopted a dual strategy of turning around the business to make it financially viable whilst seeking buyers who could support the investment needed in the restaurants.
The turnaround of the operating business comprised:
- Stabilisation of the previously declining revenue line
- Tight control of operating costs
- 50% reduction in central costs in August/September 2011
- Financial restructuring in September 2011 to reduce debt and create a stable financial platform
The central costs reduction was designed to bring the total costs of the business to a level which restaurant profits could sustain.
Separate buyers were identified for the Chez Gerard and Brasserie Gerard restaurants which comprised the majority of the trading units. One of the buyers pulled out at a late stage of legal implementation. A number of separate transactions were then identified to replace that buyer.
By September 2011 trading trend lines had started to improve and central costs were substantially reduced. The high street marketplace was highly competitive for the Brasserie Gerard chain and the need to reinvest in the restaurant premises remained. Consequently the decision was made to sell the business.
The Chez Gerard restaurants and brand were sold to Brasserie Blanc through a pre-pack transaction with the remaining sites being sold in a number of separate deals. Brasserie Blanc immediately commenced a major upgrade programme for the Chez Gerard sites.
Contact steve@icknield.com for further information.
