Directors raise ‘significant doubt’ over survival of Eddie Rockets

Restaurant group laid off over a third of its staff last year as losses ballooned fivefold

Eddie Rockets on O’Connell St in Dublin. Photograph: The Irish Times

Eddie Rockets on O’Connell St in Dublin. Photograph: The Irish Times

 

There is “significant doubt” over whether Eddie Rockets will be able to survive after losses ballooned fivefold and it was forced to lay off more than a third of its staff last year due to the pandemic, according to the latest accounts filed by the restaurant group.

Eddie Rockets (Ireland), which is owned by founder Niall Fortune and his wife Ann Fortune, has been in business for 32 years, has more than 50 outlets, and is the franchisor for some others.

Revenues

However, in its accounts for the year ended December 31st, 2020, the company’s directors warn shareholders that the pandemic has led to a significant decline in revenues at all of its restaurant locations, and raise concerns about a possible recession in Ireland and globally. The accounts were signed off on September 30th, 2021.

The directors – made up of the Fortunes and Tobias Lukaschek – say turnover for the period was down 54 per cent when compared to 2019. The company made a loss after tax of €3,037,948 during the year, compared with a loss of €574,418 in the prior year.

The company had total assets of €17,360,270 and total liabilities of €17,076,355 resulting in net assets of €283,915.

Turnover was cut in half from €19 million in 2019 to €8.7 million last year. Shareholder funds fell from €3.3 million to just €283,915. The group was also aided by a Government grant of €418,557.

The group’s troubles during the year are laid bare by its staff numbers which were cut from 337 in 2019 to 207 last year. Spending on employees came down from €7.3 million in 2019 to €2.5 million. It also received a Government subsidy of €686,921 to help with staff costs.

Challenges

“The Covid-19 pandemic has presented many challenges to the company which has resulted in a significant decline in revenues for all of the company’s restaurant locations as a result of Government restrictions and/or a reduced demand for in-restaurant dining,” the directors say.

“There is still uncertainty as to when or to what extent the applicable government measures will be lifted or whether they will continue to be reintroduced after they have been lifted.

“Even after restrictions are lifted, there is a risk of a recession in Ireland and possibly globally, potentially depressing customer demand, resulting in a period of excess supply in the restaurant market.

“Understandably, customers may also become more reticent about mixing in a social setting and cut-back on time spent in public spaces such as restaurants, bars and hotels.”

While the directors say they are not currently able to assess the full financial impact of Covid-19, they anticipate a significant decline in cash flow and profitability. They also raise concerns about the ability of the group to continue operating as a going concern.

Capital

While they believe the company is “well positioned to return to full trading capacity” once the current period of uncertainty and restriction passes, they also warn that financial assumptions in the current climate “are highly dependent on unpredictable future events”.

“Therefore the company will continue to require the support of its landlords and other creditors for the foreseeable future,” they say.

“Refinancing discussions with the group’s bankers successfully concluded in early 2021 which the directors believe will provide the essential working capital needed to support the business.

“However, notwithstanding the foregoing, the directors believe that the above circumstances still represent a material uncertainty which may cast significant doubt on the company’s ability to continue as a going concern.” Attempts by The Irish Times to contact the company for comment were unsuccessful.