The private equity owner of TGI Fridays has admitted his industry was at fault for the over-expansion of the restaurant sector which led to huge job losses in the pandemic.
Gavin Manson, finance chief of Electra, said private equity ‘played a significant part’ in a ‘very real oversupply situation’.
In the 2010s private equity piled into the UK restaurant sector backing chains such as Cafe Rouge, Byron, Leon and Pizza Express with debt-fuelled plans for rapid expansion.
Oversupply: In the 2010s private equity piled into the UK restaurant sector backing chains such as Cafe Rouge, Byron, Leon and Pizza Express with debt-fuelled plans for rapid expansion
The rush put the sector in crisis mode even before the pandemic struck, with low-paid staff taking the brunt of restructuring.
Investors were relatively unscathed, leading MPs to damn the ‘broken and exploitative business model’.
Manson said: ‘The oversupply situation was very real, and private equity played a significant part in that. It was growing very rapidly, and private equity piled in and opened a lot of restaurants.
‘I don’t think it was particularly private equity’s fault that a lot of people lost their jobs.
‘The market reached a situation where the growth in demand slowed while the growth of supply kept on going. The pandemic has right-sized that.’
Last year TGI Fridays made 200 UK staff redundant, out of 4,800, and has boomed since reopening.
Electra, which has owned TGI Fridays since 2014, plans to demerge it from its online shoe business, Hotter, and float it this year.
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