​Hub Box's Struggle, Survival, Rescue

South West-based burger chain Hub Box has been bought out of administration by South West Restaurants, preserving the future of its ten restaurants and securing the jobs of 300 staff members. The acquisition was spearheaded by Hub Box's founder, Richard Boon, ensuring the continuation of operations in key locations such as Truro, St Ives, Pentewan, Falmouth, Exeter, Cardiff, Cheltenham, Dorchester, Taunton, and Portsmouth.

Established in 2003 in St Ives, Cornwall, Hub Box expanded to 12 sites but recently faced significant financial challenges due to escalating food, energy, and labour costs. The company had been exploring investment options with Interpath Advisory to support its operations and potential expansion. On 11 July, Steve Absolom and Will Wright from Interpath Advisory were appointed as joint administrators.

Sam Birchall, head of Special Situations at Interpath Advisory, remarked, "Hub Box has grown a loyal customer base in the South West but, like many other casual dining operators, has been hit hard in recent years by high-cost inflation. We're pleased to have secured this transaction, which safeguards the brand's future and preserves employment for 300 staff."

Despite the relief of securing the chain's future, the move has not been without controversy. Richard Boon issued a public apology to creditors and shareholders who suffered financial losses due to the administration process. The pre-pack administration allowed the formation of a new company, South West Restaurants Ltd, which absorbed Hub Box's operations while writing off its historic debts. This legal manoeuvre has drawn criticism for leaving debts unpaid and creditors out of pocket.

Boon addressed the issue on social media, stating, "We don't take the debt owed to some of our other creditors, or the significant sums lost by our shareholders, lightly. We are truly very sorry for this."

Inflation, rising labour costs, and interest rate hikes exacerbated Hub Box's financial difficulties. In January, the company reported a £1.256 million loss and sought financial support from shareholders to weather the winter. Despite increased sales, the company faced significant financial pressures, with a pre-tax loss of £1.148 million in 2022, up from £282,000 the previous year.

Efforts to expand the business, including a new location in Plymouth's Royal William Yard, did not yield the desired results and further strained the company's finances. Boon detailed the tough decisions the company had to make, including the possibility of liquidation, which would have resulted in the closure of all ten restaurants and the loss of 300 jobs.

Hub Box's struggles are not unique in the casual dining sector, which rising costs and economic pressures have heavily impacted. Many similar businesses have faced closures or restructurings to survive. Industry analysts note that the hospitality sector continues to face a challenging environment, with inflation and labour shortages driving up operational costs.

Reactions from stakeholders have been mixed. Some employees expressed relief at retaining their jobs, while others, particularly creditors and shareholders, voiced frustration over the financial losses incurred. Local suppliers, who are crucial to Hub Box's operations, have shown cautious optimism, hoping that the new structure will ensure timely payments and continued business relationships.

With the acquisition by South West Restaurants, Hub Box aims to move forward on a more sustainable financial footing. Boon emphasised the importance of this strategy, saying, "This meant that we'd be able to move forward on a more sustainable financial footing without the burden of some of our legacy debts. It meant all ten restaurants could still trade, 300 jobs would be secured, and we'd still be here to buy from local suppliers."

South West Restaurants plans to implement strategic changes to enhance operational efficiency and financial stability. This includes renegotiating supplier contracts, exploring cost-effective marketing strategies, and potentially seeking new investment opportunities to fuel future growth.

Hub Box's commitment to its communities remains strong. Boon expressed gratitude for patrons' continued support and the dedication of the staff. As the company approaches its 21st anniversary, it continues to focus on supporting local businesses and providing quality food and employment across its locations.

The rescue of Hub Box from administration marks a significant milestone in the chain's history. While the move has faced scrutiny and criticism, it ensures the continuation of a beloved South West brand and secures the livelihoods of its employees. The path ahead may still hold challenges, but Hub Box's resilience and strategic restructuring offer a promising future.