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(Sharecast News) - Restaurant operator Tasty said on Tuesday that it was planning to close around 20 loss-making sites as part of a restructuring, as it continues to "navigate through challenging times".
The company - which operates the Wildwood and Dim T restaurant chains - also announced a new loan agreement for up to £750,000 to fund the implementation of the restructuring plan and provide additional working capital.
The loan will stabilise the company this year and help it to "meet new opportunities" in the sector in FY25 beyond existing operations, it said.
"Following a period of external challenges which have impacted the company's business and trading performance, the Board has explored strategic and restructuring options available to it," Tasty said.
"The board has concluded that it is in the best interests of the group to propose a restructuring plan...alongside a number of additional measures to be implemented across the group, to restructure the group to return it to profitability and secure its long-term future, in order to deliver the best outcome for stakeholders."
Tasty said that without the additional funding from the loan and the restructuring, it would need to raise additional funding by September 2024, "which is expected to be very difficult to achieve given the anticipated lossmaking performance under the group's current structure".
The company said the restructuring plan should enable "significant" EBITDA improvement of £2.1m between FY 2023 to FY 2025 through site rationalisations and other tangible cost savings.
Tasty expects to report FY2023 revenue of around £46.9m, up from £44m a year earlier and an EBITDA loss of £0.9m, versus a loss of £2.7m in 2022.
The company said the cost-of-living crisis, transport strikes and interest rate rises continued to significantly impact FY23 revenue while inflationary pressure on labour, food and utilities continues to dent profitability.
"The group's financial performance has been inhibited by a tail of underperforming sites, despite efforts at improving operational performance," it added.