The sushi chain YO! has added itself to the conveyor belt of restaurant chains considering insolvency mechanism to reduce their financial liabilities as the coronavirus pandemic continues to hammer the restaurant industry.
Sky News has learnt that YO! has engaged the accountancy firm Deloitte to explore the potential for a company voluntary arrangement (CVA) that would pave the way for unsustainable rental costs to be reduced.
A formal decision to proceed with a CVA has not yet been taken, but sources said that without meaningful bilateral concessions from landlords, the company would have little choice but to pursue one.
CVAs, which are a court-sanctioned restructuring process, have been undertaken by a large number of UK restaurant operators since the COVID-19 outbreak plunged the industry into crisis in March.
This week, PizzaExpress said it would seek to launch a CVA that would lead to roughly 70 site closures, while others exploring such a move include Pizza Hut Restaurants.
It is unclear whether YO! would look to close any of its approximately 70 restaurants as part of a CVA process.
Some of the sites where the company has not yet been able to agree concessions with landlords no longer trade under the YO! brand.
One source said that where discussions with landlords had already been fruitful, the chain had been able to reopen restaurants with a new contactless format where customers can order remotely and have food delivered to them on YO!’s sushi conveyor belts.
Since the end of the UK-wide lockdown, those sites are understood to have traded ahead of expectations, with the UK’s Eat Out to Help Out discount scheme also expected to have boosted sales in recent days.
An associated reduction in food waste has also delivered significant cost savings, according to a person close to the company.
The rollout of YO!’s new format – currently in 19 restaurants – has been undertaken with the financial backing of Mayfair Equity Partners, the private equity firm which bought a stake in the company in 2015.
A YO! spokesperson said on Wednesday: “All we can say at the moment is that YO! has been engaged throughout the last few months in exploring measures to best manage our property estate.
“This has included talking directly with our landlords and consulting with advisors so we can best adapt to the changed marketplace.”
Since its initial investment in YO!, Mayfair has helped to orchestrate the takeover of Canada’s Bento Sushi and a merger with SnowFox in the US last year.
YO! employs roughly 1400 people at its UK restaurants, as well as selling sushi in kiosks located in more than 50 Tesco stores.
It is also introducing concessions in Asda under the Panku brand.
The company is run by chief executive Richard Hodgson, a former Asda and PizzaExpress executive.