Rising costs drive Square Pie into administration
Square Pie also cited falling retail demand combined with food price inflation.
£4m turnover Square Pie Ltd, that operated four London restaurants and one outlet in Birmingham, went into administration on the 5th of February after an extensive marketing exercise undertaken by KPMG failed to secure a buyer for the restaurant side of its business.
The 16-year established business fell short of a round of equity investment in March 2017 that was designed to help fund the development of a new repositioned restaurant brand aimed at turning around the struggling group. Having raised just £100,000 of its £1m target in its latest fundraising activity, the directors loaned money to the company to fund the development of the ‘Square & Co.’ concept store last summer.
However, additional deterioration in trading, together with rising wages, property costs and ingredient prices, combined to leave the group further away from profitability by the end of 2017.
Rob Croxon and Will Wright of KPMG were appointed joint administrators at the request of the directors. The joint administrators were forced to close all of the loss-making restaurants immediately with 50 redundancies across the group.
Square Pie’s wholesale pie division remained a viable business and has been rescued, ensuring it will continue to fulfil all its orders, after angel investor and entrepreneur Oliver Wessely acquired a majority stake in a new venture, Beat Foods Ltd, that has bought the rights to produce Square Pie products for its grocery and wholesale customers for a six-figure sum. As a condition of the sale, the investor has retained the present management team to ensure the continuity of the wholesale and grocery side of the business.
“Following a month-long process, in conjunction with KPMG, to market the restaurants and the business as a whole to potential food sector buyers across the UK, we were unable to attract any party to make an offer to acquire the whole business as a going concern,” said Square Pie founder Martin Dewey.
“The collapse of the restaurant business was something we were desperate to avoid, and we were hopeful even as recently as last weekend that we could save the stores and the jobs, but unfortunately the backing didn’t materialise in the current leisure climate.
“Together with my colleagues, we worked tirelessly for over 15 years to create a fantastic brand, and I am devastated that we couldn’t make the restaurants work in the current economy. Whilst the wholesale side of the business remained viable, in the end we ran out of money to put into the business to keep the outlets,” he added.
Dewey was amongst the creditors to the business, which also included HMRC, a number of trade creditors, landlords and bondholders.
Luke Morgan, a career food industry professional who joined Square Pie in October last year, will become managing director of Beat Foods which will be headquartered in Nantwich, Cheshire.
