Not thrilling, but decent
In a process unique to the UK, Famous Brands* is placing Gourmet Burger Kitchen (GBK) into “company voluntary arrangement”. It is like our local business rescue, but seems to be more focused on rental agreements in that GBK will now attempt to get landlords to reduce rentals on under-pressure stores, or they can walk away from the rental agreement. This is good news, but not of the sort that should make shareholders any happier about the deal. Firstly, I suspect that Famous Brands would have tried to sell GBK and could not find a buyer at a price it liked. Furthermore, it shows what a mess the purchase was. It does not solve the bigger issue, which is that the UK is massively over-traded with fancy burgers – I have seen reports suggesting as many as 150 different gourmet burger brands currently operate in the UK. Results for the six months ending August show just how bad the GBK problem is, with the core business showing operating profit before GBK issues up 3.9% – not thrilling but decent considering the tough conditions.