Yesterday, news broke that the Jamie Oliver Restaurant Group was going into insolvency.
The restaurants had been floundering for a few years, and now the celebrity TV chef has finally had to throw in the towel.
Naturally, he was pretty bleak, with some estimates saying that as many as 1 300 people would now lose their jobs.
Jamie took to Twitter to thank everyone who has been a part of business operations over the past 11 years:
There’s always one person in the replies…
Too soon, bro.
Fortune decided to dissect exactly what went wrong over the years:
When the company shuttered half a dozen Jamie’s Italian restaurants in early 2017, it said it had been hit by the Brexit vote and the resulting depreciation of the British pound—importing ingredients became more expensive. The company almost went bankrupt, and was only saved by a company voluntary arrangement (CVA) with its creditors. Oliver had to inject £12.7 million of his own money into the business, and HSBC threw it another lifeline in the form of a £37 million loan.
Jamie’s Italian is hardly the only mid-market restaurant chain to suffer in the last 18 months…
Deloitte partner Sarah Humphreys, who specializes in the casual dining industry, said, “it has been commonly noted in the last two years that there was a restaurant oversupply, in particular [in] Italian chains and the burger sector.”
Shouldn’t have gone Italian, then. Too many carbs for people’s liking.
KPMG partner Will Wright, one of the administrators appointed to handle the restaurant group’s insolvency, painted a bleaker picture in talking to the Guardian, calling the current environment in casual dining “as tough as I’ve ever seen.”
“The directors at Jamie Oliver Restaurant Group have worked tirelessly to stabilize the business against a backdrop of rising costs and brittle consumer confidence,” he said.
Some pinned the blame on the business’s inflexibility rather than the landscape. “Faced with higher rent, rising food prices and increased competition, restaurants need a point of difference—it’s no coincidence that smaller brands with the freedom and flexibility to keep things fresh are currently the ones performing well,” Simon Mydlowski, a partner at the law firm Gordons, said.
Over on the BBC, they’ve spoken with Lucy, who worked at one of Jamie’s restaurants for five years. She didn’t mince her words:
“Firstly, the restaurants are far too big,” she explains. Due to pared-down staffing numbers, on busy evenings she would be waiting on as many as 11 tables at once, while managers and chefs also felt overburdened.
Then there was the tie-ins with voucher schemes, such as Groupon, which attracted fickle bargain hunters, and “didn’t inspire loyalty or regular customers”.
Tourists and those who happened to be passing by became the key clientele, says Lucy, with “very few people coming in because of excitement of being at a Jamie’s Italian”.
To finish, there are those who say that the public should take it easy on the main man:
…Jonathan Woodhouse, a former manager at Fifteen in London, thinks the man at the helm is not at fault.
While he concedes that the group “grew too big and tried to do too much,” Mr Oliver, he says, “gets a bad rep for everything”.
The Italian branches, he adds, were “effectively franchises” and run very differently to the TV chef’s early restaurants.
Again, another classic case of a business that gets too big, too soon, rather than focusing on running a handful of profitable restaurants.
Here in South Africa, we call that the Melissa’s effect.
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