High lobster prices put future of UK restaurant 'in significant doubt'
Restaurant chain posts £7 million loss in latest financial year.
However, income during the period increased by 41.2 percent to £35.53 million (€40.8 million/$43.4 million), reflecting a number of major new openings.
“Significant pre-opening” costs involved in funding Burger & Lobster’s expansion in the UK, where there are now 14 restaurants, including 12 in London, and an increase in head office costs are also said to have contributed to the poor results.
Cost of sales increased from 43 percent in 2014 to 47 percent in 2015, while administrative expenses increased by 82 percent during the same period.
In 2015, Burger & Lobster received a loan from National Westminster Bank to finance future growth. However, according to the financial report, the group has not been able to meet the necessary debt covenants.
The company is currently negotiating revised financial terms or looking to obtain replacement funding, which is said to indicate “the existence of a material uncertainty that may cast significant doubt of the group’s ability to continue as a going concern”.
In addition, the group has taken steps to improve profitability by restructuring its pricing policy in June 2016.
An original burger now costs a more competitive £16 (€18.40/$19.50), a lobster roll £25 (€28.70/$30.50), and lobster ranging in price from £19 (€21.80/$23.20) for 500g to £54 (€62/$66) for a kilo.
Loss-making restaurants have also been sold, including a 240-seat site in Cardiff, and the head office restructured, with a reduction of overheads.
With these new measures in place, the directors are said to have “reasonable expectation that the group has adequate resources to continue in operational existence for the foreseeable future”.
---