Shockwaves went through the UK restaurant industry last month when Jamie Oliver announced his restaurant group had gone into administration, and all but three sites of the Italian chain had closed with immediate effect.
Oliver, the media darling and golden boy of cooking in the UK, failed to save his empire despite a personal cash injection of nearly £13 million last year. At the time, Jamie said, “I had two hours to put money in and save it or the whole thing would go to shit that day or the next day.”
Unfortunately, it wasn’t enough, even with additional loans of £37m from HSBC and subsidiaries from his publishing and broadcasting businesses.
Now, with over 1000 jobs at risk, we’re naturally asking the question… what went wrong?
Jamie told the media around the time he invested his own money that he put it down to “rents, rates, the high street declining, food costs, Brexit, increase in the minimum wage. There was a lot going on.”
One of the joint administrators and partner at KPMG, Will Wright, added, “The directors at Jamie Oliver Restaurant Group have worked tirelessly to stabilise the business against a backdrop of rising costs and brittle consumer confidence. However, after a sales process which sought to bring new investment into the business proved unsuccessful, the team took the incredibly difficult decision to appoint administrators”
Other reasons cited by former staff include:
- The restaurants were too big paired with decreased numbers of staff
- More bargain hunters were dining due to vouchers, decreasing loyalty and profits
- Tourists became the key clientele
- Ratings and reviews were increasingly unfavourable
- The rise in cheaper options saw customers going elsewhere
There’s no doubt a variety of reasons which contributed to Jamie’s restaurant group collapse and he’s not alone in struggling to weather a difficult trading climate. According to CGA’s Market Growth Monitor report published in February 2019, managed restaurant numbers fell for the first time this decade. The % decline is equivalent to more than 10 net restaurant closures per week, with the high street bearing the brunt.
Consumers aren’t shunning eating out completely, but rather opting for cheaper alternatives or experiential eateries that offer an insta-worthy dining event.
|TIMELINE OF JAMIE OLIVER’S RESTAURANT BUSINESS|
|2002 – Jamie’s first restaurant, Fifteen, opens to coincide with Jamie’s Kitchen TV program.|
|2008 – The first Jamie’s Italian opens in Oxford.|
|2011 – Jamie’s BBQ restaurant, Barbecoa, opens in London.|
|2017 – Six Jamie’s Italian restaurants close.|
|2018 – 12 Jamie Italian eateries close and all three Barbecoa restaurants close.|
|2019 – Jamie’s restaurant business goes into administration. All but the three restaurants at Gatwick Airport close.|
LBC shared the heartfelt letter Jamie’s sent to staff on 21st May 2019, the day of closure:
I’m devastated to tell you that we have put our much-loved UK restaurants into administration. This means that the fate of Jamie’s Italian UK, Fifteen London and Barbecoa is now in the hands of an administrator, who will be responsible for their operations and their future.
I can assure you myself and the team have tried so hard to support this wonderful business, but the well-publicised struggles of the casual dining sector and decline of the UK high street in general with soaring rates and overheads have just proven too great for us to overcome. I have personally invested everything I possibly could to try and turn things around, but we have not been able to pull through this time.
We launched Jamie’s Italian in 2008 with the intention of positively disrupting mid-market dining in the high street in the UK, with great value and much higher quality ingredients, best in class animal welfare standards and an amazing team who shared my passion for great food and service. And we did exactly that, with an incredible response from the public and powering through the British recession.
Over the years we’ve achieved so much. We won pretty much every award going, including the Soil Association’s #1 kid’s menu on the high street every time it’s been awarded. Like no other brand, we’ve flourished around the globe with restaurants across Europe, Asia, the Middle East, Brazil, Australia & South Africa. We’ve served over 70 million customers worldwide in the past decade.
Our food standards have always set us apart from our competitors. All our ingredients have been the best possible quality and produced in a traceable and sustainable way. Our commitment to animal welfare, provenance and nutrition never wavered, even to the end. We stood up for what we all believe in: that customers deserve better, fairer, clearer more ethical delicious food with more nutritious options.
Fifteen was my very first restaurant but like no other restaurant since, this was also my first charity and social initiative. It’s been an incredible journey positively impacting on hundreds of kids over the last 16 years, with the vast majority going on to become talented and successful chefs in their own right. It was an absolute honour and joy to be a part of this and I’m so pleased that the team at Fifteen Cornwall still delivers amazing food and apprentice mentoring to continue this legacy and invest in young people.
Barbecoa was a passion project and a massive hit. We were one of the first to bring extraordinary meat, our own butchery and cooking over wood fire to London diners. We created a gorgeous space and delivered truly memorable dining experiences in one of the city’s most iconic settings.
I’m so proud of all these achievements which makes it even more painful to say goodbye. We’ve had the very best and sadly also the worst of it.
I would like to personally thank all of the UK restaurant staff, many of whom have put their hearts and souls into this business for a decade. I appreciate how difficult this is for everyone affected.
You guys are the best in the business and I know you will move on to great things in no time at all. I’m truly sorry and give you all my love, gratitude and most importantly wish you all the luck in the world. Today is a really sad day. Big love as ever
Jamie O xxx
What can we, as business owners, learn from the collapse of Jamie’s restaurant empire?
1. No one is immune from failure
Jamie Oliver in many investor’s eyes would have been a sure bet. He’s had over two decades in the limelight, his restaurants are award-winning and his 31 cookbooks bestselling. Even with his celebrity status, influence, business success and financial input – his restaurant business has still failed.
2. Rapid growth isn’t always sustainable
Jamie’s restaurant empire grew rapidly during the first 6 years, hitting 42 restaurants during its peak. Maintaining standards and margin across a portfolio that expanded that quickly is challenging and quality evidently slipped.
3. Markets change
The high street has been in decline for a while but full service, managed restaurants have only recently shown a decline in favour of quick, cheaper eateries. This change is part and parcel of industry and consumer behaviours changing over time. All industries ebb and flow, and evolve. If you don’t evolve with it (or ahead of it if you’re lucky and/or your business is agile) you could quickly get left behind.
4. In every failure there is opportunity
Hot on the heels of the news, the Gaucho restaurant CEO invited all employees of Jamie Oliver’s restaurant group a fast track to a final interview in order to secure a position at either Gaucho or M Restaurants. Their sincere tweet just shows how to find opportunity in every failure (even if not your own):
It’s not all doom and gloom for the restaurant industry. Gordon Ramsey’s restaurant empire reported pre-tax profits following a £3.8 million loss the year before, the CGA reported a 27.4% increase in group restaurants in the five years to March 2019 and a MCA report shows that the number of UK street food vendors are continuing to grow significantly year on year. As always, when times are tough, there will be some losers but plenty of opportunities for those who can grasp them.