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The Real Reason Jamie Oliver's Restaurant Empire Is Collapsing

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10:06   |   Jun 25, 2019

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The Real Reason Jamie Oliver's Restaurant Empire Is Collapsing
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  • In May 2019, Jamie Oliver — one of the world's biggest celebrity chefs — saw his restaurant
  • empire come crashing down.
  • It's been just over a decade since his Jamie's Italian brand of restaurants first launched
  • in 2008.
  • How could such a popular celebrity's restaurant empire fall so far, so fast?
  • This massive 2019 closure isn't the first time Oliver has shuttered doors.
  • In 2014, The Guardian reported on another set of Oliver-inspired restaurants — Union
  • Jacks — that were closing.
  • The Guardian has also reported that Oliver's restaurants have been in trouble for a long,
  • long time.
  • In 2017, they released the numbers from the previous year and revealed that while they
  • had logged a $3 million profit in 2015, 2016 brought a $12.6 million loss.
  • By 2018, The Telegraph was reporting some of Jamie's Italian's 40+ locations were going
  • to be closing.
  • Oliver closed his chain of cookery shops, Recipease, in 2015.
  • According to The Guardian, the presses stopped rolling on his self-titled food magazine,
  • Jamie, in 2017.
  • That's a lot of stuff coming to a close.
  • According to Bloomberg, the 2019 announcement of insolvency came with the immediate closure
  • of Jamie's Italian, Barbecoa, and Fifteen London restaurants.
  • In 2018, there had been another announcement — The Telegraph reported Jamie's Italian
  • was closing 12 locations and asking for their rent to be lowered at another 11.
  • They were struggling with massive debts, but finding out just what was going on with the
  • celebrity chef's chain was difficult.
  • Why?
  • Because the hundreds of people who suddenly found themselves unemployed were reportedly
  • instructed to sign non-disclosure agreements preventing them from discussing anything about
  • the situation — and that included making any comments about Oliver or his family.
  • That sounds odd, at first, until you learn that former staff members — many speaking
  • anonymously — had come out to blame Oliver's brother-in-law, a top executive at Jamie Oliver
  • Group, for the massive failures suffered by the restaurants.
  • It's been a slow rollout of closures for Jamie's Italian over the course of a few years, and
  • in January 2017, The Guardian reported that he was going to be closing six locations.
  • The reason?
  • It was reported that the closures were coming — in part — so Oliver could focus more
  • on international endeavors, and it was also because they were experiencing all kinds of,
  • quote, "pressures and unknowns" following the Brexit vote.
  • To be fair, there are still a lot of unknowns regarding Brexit in 2019, but according to
  • ITV, a huge part of the problem Oliver's restaurants were facing was because of the collapse of
  • the pound and an increase in the costs of importing ingredients from Italy.
  • In order to stay viable, each restaurant needed to average about 3,000 covers a week - and
  • those just didn't make the cut.
  • According to CNBC, Oliver saw his business failing in 2018, and claimed he had learned
  • some valuable lessons from it.
  • Did he?
  • Given the following year's news that's uncertain, but he did say they had started to realize
  • that not only did it take time to get something as big and complicated as a restaurant right,
  • but that it wasn't going to happen just because the person with the name on the door was famous.
  • Jon Knight, CEO of the Jamie Oliver Restaurant Group in 2017, cited the disconnect between
  • Oliver's image and his restaurants as a huge problem.
  • He explained,
  • "The customer would go and buy Jamie's latest book, would sit at home and watch Jamie on
  • Channel 4, but then he or she would go out to eat at [competitor chain] Prezzo.
  • That was our problem."
  • According to The New York Times, Oliver started looking for a buyer to help save his restaurants
  • in late 2018 - though a buyer didn't materialize as fast as he would have liked.
  • Will Wright of KPMG, one of the administrators brought in at the start of the closures, had
  • this to say:
  • "The current trading environment for companies across the casual dining sector is 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."
  • But they were fighting an uphill battle.
  • In early 2018, The Guardian got a peek at court documents that detailed just how much
  • Oliver's restaurants were carrying in debt - and it was no small amount.
  • Jamie's Italian alone had $90.8 million in debt.
  • Oliver's representatives were quick to call the debt "standard" for organizations, and
  • stressed that there was no one out there actually waiting for money.
  • Documents, though, suggested the writing was already on the wall.
  • Sometimes, it takes failure to learn some important lessons, and when he talked about
  • his restaurant difficulties in 2018, Oliver said he had learned a lot - and that he knew
  • what he would go back and change.
  • According to CNBC, one of those lessons was that there was a danger in opening too many
  • places too fast.
  • Oliver said,
  • "In the future, I might spend a bit more time getting in second and getting it right."
  • Oliver empire exec Jon Knight added that the mistake of, quote, "opening too many restaurants,
  • too quickly, in the wrong places" was also a huge miscalculation.
  • According to Eater London, Knight explained that they had overlooked two key factors when
  • it came to getting in the right places - they hadn't picked locations with enough of a tourist
  • draw or a university crowd.
  • Here's the thing about celebrity restaurants: they rely heavily on the draw of the celebrity
  • to get people in the door.
  • The problem with Jamie Oliver?
  • He has a tendency to make people very angry.
  • Take the UK's decision to put a tax on high-sugar soft drinks, which he championed.
  • "And I've took the liberty of putting in just the five years of elementary school sugar
  • just from milk."
  • But media outlets like the Spectator pointed out his hypocrisy - he still sold cookbooks
  • that included recipes containing very high-sugar desserts, and he sold sugary drinks at his
  • restaurants - just at a higher price than other drinks.
  • Oops?
  • That's just the start, and almost everyone can find something in Oliver's past to be
  • angry about.
  • There's the time he united Spain in their collective outrage over his "paella" recipe,
  • which contained chorizo.
  • “It trended for weeks.
  • And death threats and all sorts because of a bit of sausage."
  • And there was the time he was accused of cultural appropriation with his "jerk rice."
  • The list goes on and on.
  • So why would any of the people he's angered want to go eat at his restaurants?
  • When Oliver's chain faced insolvency in 2019, it was the second time it had gotten that
  • bad.
  • The first time it happened - in September 2017 - Oliver was able to pull off a last-minute
  • save by dumping almost $16.5 million of his own money into the business.
  • He did it just hours before they were going to have to make the decision to pull the plug.
  • According to The Guardian, Oliver was - at the time - a bit mystified about what had
  • gone wrong.
  • He told the Financial Times,
  • "We had simply run out of cash.
  • […] And we hadn't expected it.
  • That is just not normal, in any business.
  • You have quarterly meetings.
  • You do board meetings.
  • People supposed to manage that stuff should manage that stuff."
  • In addition to that, it took another $46.8 million in loans and subsidies from other
  • parts of Oliver's business empire to shore up the ailing restaurants, and Oliver described
  • it as:
  • "The perfect storm: rents, rates, the high street declining, food costs, Brexit, increase
  • in the minimum wage.
  • There was a lot going on."
  • And it continued to go on.
  • Should Oliver just stick to the cooking?
  • Maybe, especially based on the fact that according to The Guardian, he told Cannes Lions festival
  • PR chief Richard Edelman this in 2015:
  • "I worked out the other day, I took a little review of my 17 years - we've done all right,
  • I've sold a few books and we've made a few quid - I realized that I think I wasted and
  • f---ed up about 40 percent."
  • That "few quid" he's made was, at the time, estimated by the Sunday Times Rich List to
  • be about $228 million, and Oliver says that other 40 percent of endeavors that had failed
  • were, quote, "quite painful."
  • He also noted that he wasn't completely wasting those failures, saying,
  • "Did the mistakes not teach me powerful lessons?
  • I'm trying to turn those mistakes into what maybe you guys call R&D.
  • What is the percentage of turnover that is right for innovation.
  • What is healthy?
  • Is it 10 percent, 20 percent?
  • Is 40 percent reckless?"
  • The fall of Oliver's restaurant empire is pretty high-profile, but according to The
  • Telegraph, he's not alone in some of the problems he's facing: they're hitting other restaurants,
  • too - we just don't hear about them as much.
  • Numbers of restaurant closures, they say, are up 35 percent from the previous year.
  • In 2018, UK Hospitality reported that the costs of running a restaurant had hit a new,
  • 12-year high.
  • Payroll costs were up and profit margins were shrinking, all while food sales remained stagnant
  • and drink sales took a nosedive.
  • And on the other side of the pond, similar trends are being seen in the United States.
  • Steakhouses have been struggling under increased cost of doing business, and it's taking a
  • toll on chain restaurants as well.
  • "Business owners saying they're getting killed by increase in the minimum wage.
  • They'll go out of business without a surcharge."
  • When everyone talks about Jamie Oliver's restaurant empire falling, they tend to talk about Jamie
  • Oliver.
  • But it's important to remember that many other lives are being changed, too.
  • According to Sky News, 2019's insolvency means that around 1,300 people are now without work.
  • And that's not the first time that hundreds of people have lost their jobs or been laid
  • off because of the financial difficulties that developed around Oliver's restaurants.
  • When he closed 12 locations in 2018, The Telegraph reported that more than 600 people saw their
  • jobs disappear overnight.
  • And that's way more than they originally thought would be lost - according to the Independent,
  • it was first estimated that the closure and restructuring plan was going to put around
  • 200 jobs at risk.
  • The resulting job loss is a tragedy that all too often gets overlooked when news like this
  • hits the headlines.
  • At the end of the day, you don't have to worry about Oliver.
  • Sure, he closed a huge number of restaurants, but he's fine.
  • According to the BBC, not all of his restaurants are going to be closing, and those that are
  • under the control of franchisees - like his international ventures - will stay open.
  • The Guardian took a look at Oliver's holdings, and found that his restaurants are only a
  • small portion of the empire he's built.
  • Jamie Oliver Holdings - which includes his book and television ventures - is still pulling
  • in millions, especially with help from his best-selling cookbooks.
  • He also has a huge stake in licensing agreements, which is a division that basically oversees
  • his partnership with various companies and stores to put his name and image on merchandise.
  • House Beautiful reported that he and his family bought a new family home in Hampstead in 2015,
  • estimated to be worth somewhere around $11.3 million.
  • Hello! then later reported that they were adding to their homes with the subsequent
  • purchase of a 70-acre, 16th century mansion in Essex, a country home worth around $7.6
  • million.
  • So he's not going anywhere soon.
  • Check out one of our newest videos right here!
  • Plus, even more Mashed videos about your favorite stuff are coming soon.
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Description

In May 2019, Jamie Oliver — one of the world's biggest celebrity chefs — saw his restaurant empire come crashing down. It's been just over a decade since his Jamie's Italian brand of restaurants first launched in 2008. How could such a popular celebrity's restaurant empire fall so far, so fast?

This massive 2019 closure isn't the first time Oliver has shuttered doors. In 2014, The Guardian reported on another set of Oliver-inspired restaurants — Union Jacks — that were closing.

The Guardian has also reported that Oliver's restaurants have been in trouble for a long, long time. In 2017, they released the numbers from the previous year and revealed that while they had logged a $3 million profit in 2015, 2016 brought a $12.6 million loss. By 2018, The Telegraph was reporting some of Jamie's Italian's 40+ locations were going to be closing.

Oliver closed his chain of cookery shops, Recipease, in 2015. According to The Guardian, the presses stopped rolling on his self-titled food magazine, Jamie, in 2017.

That's a lot of stuff coming to a close.

Watch the video to see the real reason Jamie Oliver's restaurant empire is collapsing!

Long struggle | #
Non-disclosure agreements | #
Brexit to blame | #
Disconnect with fans | #
Major debt | #
Too much too fast | #
Massively polarizing | #
Perfect storm | #
Not good at business? | #
Skyrocketing costs | #
What now? | #
Don't feel too bad | #

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