Propel Morning Briefing Mast Head Propel Hospitaliity website Paul's Twitter Link Subscribe Unsubscribe Web Version Forward Email Swifty Banner Morning Briefing Strap Line
Tue 19th Nov 2019 - Exclusive – Tossed parent company to undergo CVA due to underperforming Vital Ingredient sites
Exclusive – Tossed parent company to undergo CVA due to underperforming Vital Ingredient sites: The parent company of Tossed, the London-based healthy eating brand, is to undergo a company voluntary arrangement (CVA), after suffering a slump in trading due in part to the continued underperformance of the Vital Ingredient business it acquired last spring, Propel has learned. Zest Food, trading as Tossed and Vital Ingredient, is understood to be working with David Rubin & Partners on the CVA proposal, which incorporates 16 Tossed sites and eight Vital Ingredient sites based in London. It is thought under the terms of the proposal up to six Vital sites could be under threat of closure and a small number of Tossed sites. The deal for Vital Ingredient gave Zest a rare opportunity to acquire a director competitor, and subsequently to convert some to the Tossed brand or to sell to another operator. It also provided an opportunity for increased market penetration, purchasing synergies and a rationalised at head office, all of which were achieved. However, by last autumn, following a disappointing summer’s trading in the Vital estate, it became apparent the trade of the company in which the Vital sites were in was no longer viable on a standalone basis. Therefore ten of its 11 property interests were disposed of, with eight being transferred at fair value to Zest. It was the company’s intention to convert all Vital sites to the Tossed brand this year, but it is understood due to insufficient cash flow, arising primarily due to trading difficulties in the Vital estate, this hasn’t happened. Zest has also been unable to invest in the refurbishment of its older Tossed sites, and this has also impacted trade at these sites. The business has also, like the wider sector, had to contend with increased costs, uncertainty surrounding Brexit and accelerated emergence of delivery sales. In addition, two of the company’s Tossed sites operate within shopping centres, where it said the performance downturn has been notably worse than on the high street. This summer’s trading has also a continued stark disparity in relative performance between the two brands. Tossed reported growth, including delivery, of 6% in the six months to September 2019, while the Vital estate reported an 8% decline in the same period. December is the company’s lowest sales month with sites quieter and in most cases closed for Christmas. These reduced sales levels, when combined with the timing of the quarterly rent payment near the end of the month, and a significant proportion of its monthly supplier payments, result in a critical pinch point for the company’s cash flow. The result of the shortfall against anticipated summer trading, particularly in the Vital estate, means that, despite removing all non-essential capital expenditure, insufficient cash has been built up to enable the December month-end creditors and rent quarter to be met. It is thought the company’s situation has been further exacerbated by the recent news credit insurance has been removed by the insurer supporting Zest’s two largest suppliers. In light of all of the above, the company approached David Rubin & Partners and following advice received, decided the best course of action was to propose to its creditors a CVA. The proposals within the CVA would allow it to navigate around a significant cash flow shortage without the need to place the business into administration; to reduce ongoing operational gearing; move all rents to monthly payments; explore significantly reduced rentals or achieve exits in locations which are no longer viable; and generate sufficient cash flow to enable conversion of retained Vital sites into Tossed branded stores and refurbish the older generation Tossed sites. The company believes the resultant business would have a streamlined estate with an appropriate level of rent, be able to service its bank debt, pay its creditors on normal commercials terms, and pay a portion of its historic debt. It also believes with the anticipated growth of in-store Tossed trading as the market normalises, supported by delivery and vending, it will be positioned as the leader in technology-led healthy eating in London.


Return to Archive Click Here to Return to the Archive Listing
 
Punch Taverns Link
Return to Archive Click Here to Return to the Archive Listing
Propel Premium
 
Weston's Banner
 
Ei Group Banner
 
OrderPay Banner
 
TipJar Banner
 
Wi5 Banner
 
Weston's Banner
 
Menu Connect Banner
 
Trail Banner
 
Odamo Banner
 
Arla Foods Banner
 
Nestle Waters Banner
 
Yumpingo Banner
 
Swifty Banner
 
Camile Banner
 
Eagle Eye Banner
 
Carlsberg Banner
 
Ten Kites Banner
 
Shield Safety Banner
 
Biff's Banner
 
Zonal Banner
 
Orderbee Banner
 
McCain Banner
 
Matthew Clark Banner
 
Deliverect Banner
 
A2Z Masks Banner
 
Sintuitive Banner
 
Yoello Banner
 
Boxpark Banner
 
Prestige Purchasing Banner
 
Access Banner
 
IOL Banner
 
COREcruitment Banner
 
Startle Banner
 
Venners Banner
 
Pago Banner
 
Punch Taverns Link Punch Taverns Link
Wi5 Banner
ALMR Web Link Web Version Unsubscribe Subscribe Propel Info website