Speaking to the Financial Times, Osmond said that private equity firms buying casual dining businesses at risk of bankruptcy because of the Covid-19 crisis “fail to understand the business they are acquiring”.
He added that the model for mid-market branded restaurants was “absolutely broken” because of massive oversupply in the sector; high overhead costs; and a decline in visitor numbers even before the pandemic.
Going forward, Osmond said he believed the opportunities were now in upmarket chains such as millionaire Richard Caring’s The Ivy group.
A number of casual dining chains in the UK have said they are currently exploring restructuring processes; or have put themselves up for sale as a result of the impact to revenue caused by the Coronavirus lockdown, with smaller private equity houses picking some up for much-reduced prices.
They include Ask Italian, Coco di Mama and Zizzi operator Azzurri, which was acquired by TowerBrook Capital Partners through a pre-pack administration deal earlier this month, leading to the closure of 75 sites in the group's 300-strong estate.
Elsewhere Casual Dining Group, which operates brands including Las Iguanas, Bella Italia and Café Rouge, has announced plans to close 91 of its sites after entering administration.
The group is seeking a buyer to save what remains of the business, with former TGI Friday’s backer Epiris believed to be in advanced talks to acquire it.
Meanwhile, multi-brand operator The Restaurant Group announced it had entered a company voluntary agreement (CVA) last month, exiting 125 unviable sites in the process.
Despite the difficulties faced by retail and restaurant chains, Osmond, who with fellow entrepreneur Luke Johnson took PizzaExpress public and expanded the chain to more than 200 sites during the 90s, said he was still a “massive believer in the high street” but called for an overhaul of rent structures.
“You have to set the rent at a place where an averagely good operator can make a reasonable return on his or her capital . . . [Landlords] have completely ignored that idea for the last 10 to 15 years,” he said.