Jamie Oliver: Problems at Naked Chef’s empire laid bare
Rising heat in the UK restaurant sector forces the celebrity cook to look further afield for growth
The heat is rising in the UK restaurant sector and now the pressure has caught up with a household name in the form of Jamie Oliver. His two-site Barbecoa chain is on the brink of collapse, with the Piccadilly branch closing on Sunday.
It follows problems at the celebrity chef’s other chain, Jamie’s Italian, which earlier this year revealed it would close 13 sites and beg for rent cuts at 11 more as it struggles with debts of £70-million (about R1.15-billion).
The problems facing Oliver’s empire are not unique. Burger chain Byron is also set to close sites and pay less rent to some of its landlords in the face of rising costs and stiff competition. Italian eatery Strada closed more than a third of its sites at the start of the year, deeming them “no longer viable”, while rival Prezzo has reportedly called in restructuring experts.Earlier this week accountancy firm Moore Stephens found that the number of insolvencies of restaurant businesses in the UK jumped 20% to 984 in September, up from 825 the previous year.
But there are also more specific problems with Oliver’s brand that experts believe could undermine his hopes of a quick turnaround.
Oliver burst on to the scene at the turn of the century under the guise of the cheeky Naked Chef and warmed hearts with projects such as Fifteen, his restaurant venture to get young unemployed people back into work. He also won plaudits for his Ministry of Food project, a cookery school that set out to get people whipping up home-cooked recipes and passing them on.
But one person with knowledge of Oliver’s businesses believes the star chef has been given “bad advice” in regards to Jamie’s Italian. He questions whether consumers feel the chef’s passion is the same for the chain as for Fifteen or his American diner business, which opened its first branch in Soho in 2013, and another at Gatwick Airport last year.
“I think he has got people around him who have probably overleveraged his brand and been too ambitious at a time when they should have been more thoughtful,” the person says.
The expert also contends that Jamie’s Italian has not had enough investment and lacks the required capital to keep a brand up-to-date in today’s fast-paced market. “Since it has opened it has not had a refresh of the menu or the decor and he has been a name above the door and nothing else.”
Peter Backman, whose consultancy business monitors the eating-out market, thinks sky-high rent was the single biggest issue for Jamie’s Italian. “It is noticeable the sites it is closing are in high-profile places such as Piccadilly and Bluewater shopping centre,” he says.
“This suggests the business is paying eye-watering rents and the custom is just not coming through.”
Backman says the Jamie Oliver brand is not as strong as it once was.
“At the outset the restaurants were closely aligned to his personal brand but now he is no longer as much in the spotlight and there is more competition at a time his celebrity pull does not necessarily have the same impact.”This contention is arguably given weight by the closure last year of the eponymous Jamie magazine.
Oliver sold the rights to the title to publisher Hearst in 2016. Hearst promptly appointed a new female editor and relaunched the magazine with the aim of targeting the “urban female foodie” market, putting Oliver back “at the heart of the magazine”. But the revamp could not arrest a slide in readership: Press Gazette figures for the second half of 2016 showed a 10% year-on-year drop in readership to 47,455, compared to 75,000 in its heyday in 2009. At the time of its closure, a spokesman for Jamie Oliver said increasing demand for online content had contributed to the magazine’s decline.
Too much supply
The casual dining sector in general is awash with excess supply, particularly in Italian food.
In a bid to get punters through the door, Jamie’s Italian launched a Super Lunch offer to grow its share of the market, but this came at a cost for the company. It was cited as the reason for a near-3% fall in sales in 2016.
Soaring business rates also increased its costs and contributed to the chain’s £10-million pre-tax loss.
In the accounts for Jamie’s Italian, the directors of the company — including Jamie Oliver — noted the “challenging trading conditions on the UK high street” and opted to close six sites out of seven it had reviewed. Furthermore, it handed back the lease for a site at King’s Cross that had been signed some years earlier but no longer made commercial sense.
A person with knowledge of the chef’s business says there is an effort not to let what is happening with his Italian chain “drag other pieces down”, such as Oliver’s Fifteen venture.
Pressure is mounting for a rallying cry from the chef himself, who has been silent since the pressure on his two chains emerged.Righting the ship
There are hopes the restructuring deal for Jamie’s Italian agreed earlier this year will help right the business amid the UK’s hostile trading environment. In 2016 it signed 19 franchise partners in 26 countries, suggesting Oliver may continue to look overseas for fresh success.
The celebrity chef is unlikely to be the last to get his fingers burned, especially with ever more pressure on disposable incomes in the UK. As industry commentator Chris Wickham puts it: “Eating out is one of the most economically sensitive areas of personal consumption, if not the most. Throw in higher labour and food costs, and the cocktail is beyond lethal.”
© The Daily Telegraph