Leon warns of high street struggles as sales growth slows

By Sophie Witts contact

- Last updated on GMT

Leon warns of high street struggles as sales growth slows
Leon CEO John Vincent has said the rising cost of trading on the UK high street is “incentivising” the group to open more restaurants overseas.

In the latest accounts for the “healthy fast food” chain Vincent warned that the government was “killing” the high street at the same time as commissioning reviews on its future.

He added that there was “significant inequality” between business rates charged to city centre tenants and online retailers based out-of-town.

“[The] increases in business rates, especially in London, have been immense and frankly we do not buy in to the methodology or believe they are fairly calculated,” he said.

“Nor do we believe online businesses should have such low business rates bills by comparison. It creates an uneven playing field and penalises physical retail and restaurant businesses.

“Many businesses are failing and this will continue with the net impact being less revenue for the government and not more.”

His comments follow slowing sales growth at the chain. Accounts show like-for-like sales at Leon rose 0.9% for the 53 weeks to 31 December 2017, compared to 7.6% in 2016.

Total revenue increased 33% to £56.3m, while EDBITDA rose 3% to £3.6m.

Heading abroad

Vincent said the 20% VAT rate paid by restaurants for eat-in food and drink and hot items that are taken away “unfairly penalises” the hospitality industry.

It makes “no sense” that a hot Leon wrap is taxed at 20% while a refrigerated wrap from elsewhere is not, he added.

“It incentivises us to open restaurants abroad rather than in the UK,” Vincent wrote.

However, the company said it will continue to expand in the UK and new markets – mainly in Europe​ – as well as trialling Leon in the USA, where its first store will launch in Washington D.C this summer.

Leon also launched spin-off Thai brand Tuk Shop,​ created with chef David Thompson’s Aylmer Aaharn food group, in London last month.

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