LITTLE CHEF 

KPMG has been called in to advise the owners of Little Chef as the restaurant network tries to stay afloat. The People's Restaurant Group (PRG) acquired the business in 2005 for £52m, but is now conducting talks with a American consortium in a last-ditch bid to save the chain from bankruptcy. This latest development unfolded less than a week after PRG entered into crunch talks with its landlord and othert creditors over cash issues.

PRG suffered problems after a £60.3m sale and leaseback deal of 65 sites in February with Israeli property investment group Arazim Investment. Trading picked up after the transaction, but not as quickly as PRG had expected. KPMG envoys joined PRG at the negotiation table as talks began with the US group to hammer out a deal that would safeguard Little Chef's future and galvanise its market presence with a package of funds to enhance its network of about 235 outlets. (Source: Accountancy Age)

Little Chef was on the brink of collapse as bosses were locked in emergency talks over a last-ditch rescue package. Sources in the City claimed they were set to call in administrators. Nearly 4,000 jobs are at stake at the 235-restaurant chain which still attracts 20 million customers a year with its family ethos and hearty meals like the £6.99 Olympic Breakfast. It serves 10 million cups of tea, 12 million bacon rashers, and 13 million eggs and sausages a year but it has failed to keep pace with fast-food giants such as McDonalds and Pizza Hut.

And faced with further competition from motorway services and garage forecourt shops selling sandwiches and coffee, the firm has struggled with the rent on some outlets. Nearly half its restaurants have been closed over the last five years. Two years ago, Little Chef tried to put Fat Charlie on a crash diet to combat concerns over obesity, but the plan for a slimmer character as the firm's mascot sparked a national outcry and the idea was shelved.

There were hopes of a new start last year when Travelodge sold the chain to entrepreneurs Lawrence Wosskow and Simon Heath for £52million. The Sheffield-based pair cut prices and raised around £59million by selling properties. They also tried opening new "Coffee Tempo!" bars in some branches and adding American-style sub sandwiches to the menu but a rise in takings failed to match soaring rent bills. Financial experts estimate the company is currently losing about £3million a year. (Source: Daily Mirror, Dec/06)