So, my go-to lunch spot, LEON Restaurants, started by John Vincent, Henry Dimbleby and chef Allegra McEvedy was named after Vincent's dad and opened first on Carnaby Street (my go to outlet) in 2004. Only six months later, Leon snagged the Observer "Best New Restaurant" award.
LEON was bought by the Issa brothers in 2021 in a deal rumoured to be worth around £100m, which came shortly after they bought Asda in a highly leveraged £6.8bn deal.
The Issas built their business empire, starting from one petrol station and expanding globally to over 6,600 outlets. With the acquisition of Asda their aim was to make it the UK's second-largest supermarket group.
In acquiring Asda and Leon, it seemed that EG Group can see the (very distant) writing on the wall for petrol, and therefore petrol stations, and was building a portfolio to serve the consumer across all missions, day parts and needs. With Asda and Leon joining the EG franchises of Greggs, KFC, Krispy Kreme etc. EG was leveraging its acquisitions and combined infrastructure to be there for breakfast, lunch and dinner, whether Grocery, Foodservice or Convenience. Couple this with the move to electric charging (The UK government announced that it will invest £70m into rapid electric car chargers on garage forecourts this week at COP28) and the strategy seems super smart.
However, post-acquisition challenges, including economic uncertainties and the significant debt burden, impact the perceived success of their ventures.
• Asda's financial performance has declined, with flat sales and reduced profits
• A considerable debt pile, raising questions about the debt management strategy
• The shift from a pandemic-induced grocery boom to a world squeezed by inflation and a cost of living crisis
• Rumours of trouble at t’mill’ in Leeds based HQ, Asda House, abound with seemingly continual leadership changes
Daniel Woolfson in today's Telegraph reports that the Issa brothers have said a combination of hybrid working and rail strikes has held back Leon’s post-Covid recovery, as losses mount at my favourite fast food chain. Zuber Issa said sales across Leon’s 85 UK restaurants improved week by week” in 2022 as Covid restrictions eased, although 2023 “remained challenging”. Sales rose £29m to £83m in 2022 but losses increased from £7.5m to £12.6m. Revenues were more than £30m lower than in 2019 when the chain’s turnover hit £115m. Leon is not the only food chain struggling as can be seen at my other go-to Itsu.
So, have they bitten off more than they can chew?
Whatever happens the Issa brothers are a remarkable success story of self-made billionaires home-grown in IssaVille, aka Blackburn.
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