Co-founder Richard Beatty wrote in recent filings on Companies House that the CVA will allow Polpo to “avoid entering in to administration or liquidation” by exiting two “loss making central London sites”.
The group’s Polpetto restaurant in Soho and Polpo in Notting Hill have both been on the market for several months.
Beatty took over as managing director in October 2018 following the departure of Scott Macdonald, formerly of Bill's, after less than a year and a half in the role.
Macdonld’s tenure saw the closure of Polpo restaurants in Bristol and Exeter and its Ape & Bird site in London’s Cambridge Circus, as well as abandoning a planned opening in Oxford Westgate.
In documents filed on Companies House on 7 March, Beatty wrote: “The previous senior management spent little time engaging with staff and customers which led to a deterioration in service standards. The re-involvement [of] the high profile founders has re-engaged Polpo’s historic customer base and led to an improvement in staff morale.
“Assuming the CVA is successful, the directors believe they have put the foundations in place to ensure the future viability of the business.”
Accounts show turnover at Polpo for the 12 months to 1 April 2018 was £13.56m, down £693k on the previous year. The company said this was due to declining like for like sales, as well several site closures.
Polpo said an “unsustainable increase” in overheads and losses, plus an onerous lease charge of £125,000, resulted in a loss for the year of £1.3m.
Adjusted EBITDA was -£318,000, compared to a positive £1.48m the previous year.
Despite Beatty making expected savings of £1m a year on head office salaries and “non-essential” costs, the company did not have sufficient funds to meet historic obligations to HMRC, and the directors determined in February 2019 the best course of action was to pursue a CVA.
Polpo has six London sites, in locations including Chelsea, Covent Garden, Smithfield, and one in Brighton.