Blunders were to blame for Little Chef's downfall

Operational blunders rather than excessive rents led to the collapse of roadside chain Little Chef, a source close to last year's deal with property group Arazim has revealed.

Since the 234-strong chain went into administration two weeks ago, speculation has mounted that a £60m sale-and-leaseback deal with Arazim in February 2006 on 65 sites had financially overstretched owners Lawrence Wosskow and Simon Heath.

But the property deal stacked up on paper, the source told Caterer. "If Little Chef had continued trading as it was, or even if sales had fallen off a bit, they would have been able to meet the repayments."

Caterer understands that Little Chef was making about £10m profit on just less than £100m turnover at the time of the deal. The source said Heath and Wosskow's decision to slash prices was at the root of the problem. "It didn't make more people stop [at Little Chef] and it simply cut the amount of money going through the till."

The source added that rent repayments were in line with the market norm and calculated against the profit being made across the 65 sites.

Since the collapse, questions have been raised about other decisions made by Wosskow and Heath. Observers have pointed to a failed £1b bid for Compass travel concession business SSP just one month after acquiring Little Chef, the slow rollout of its Coffee Tempo! grab-and-go café brand and the installation of Wi-Fi internet access while issues such as dirty toilets were ignored.

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By Tom Bill

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