Fri, 28 Aug 2020 | BUSINESS SALE
London-focused burrito chain Chilango has been acquired out of administration by investment group RD Capital Partners. Chilango, which was known for its “Burrito Bonds” funding rounds, entered administration last month.
The acquisition by RD Capital Partners, for an undisclosed sum, followed a competitive sales process and will see 10 of the chain’s 11 restaurants remain open, saving 130 jobs. Chilango Managing Director Richard Franks, who took over in February, will continue to lead the company.
Joint administrator Gordon Thomson of RSM said: “Despite the commendable support provided by the government, the pandemic and associated lockdown measures have presented significant challenges to the casual dining industry. This deal, together with the backing of RD Capital Partners, secures 130 jobs and will allow the Chilango brand to grow.”
The deal represents RD Capital Partners’ first acquisition in the hospitality sector. RD Chief Executive Sameer Rizvi said Chilango had a “great proposition, which appeals to a wide customer base” and that it was well-placed to take advantage of the growing trend of home food delivery, mentioning the company’s “very good relationship with the leadership team at Deliveroo”.
Rizvi added that there were no immediate plans to move the chain to a delivery only model, but that it was a possibility in future.
Chilango’s “Burrito Bonds” saw around 1,500 investors buy mini-bonds in the chain worth £5.8 million over two fundraising rounds in 2014 and 2018. The scheme promised investors returns of 8 per cent a year, but the company warned investors in December 2019 that it was in need of rescue restructuring and entered a CVA in January. Bondholders are now creditors and are thought to be unlikely to see a return on their investments.
The CVA saw rent cuts at three of its sites and the exiting of four leases on dormant sites. Co-founders Eric Partaker and Dan Houghton, who formed Chilango in 2007, stepped as co-chief executives ahead of the business’ restructuring. The company was still in the midst of restructuring when the COVID-19 pandemic saw restaurants shut in late March, compounding Chilango’s problems.
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