Return of the Leon king

Is Asda ditching of hip fast food joint Leon an example of how NOT to do integration?

Hello Rainmakers,

Asda has got rid of Leon, selling it back to its founder John Vincent. In one move it tells the remarkable story of the unravelling of the ambitious strategy of the Issa Brothers, but also a masterclass in how not to do deal integration and cultural alignment.

In a message on the Leon website Vincent added his own personal mobile number and email address and invited people to contact him with “frustrations, ideas, and insults”.

He hasn’t responded to our request for a chat, but we’ll let you know. For now, here’s a hot take on how we got here, and where we might end up.

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John Vincent, founder of Leon, pic courtesy of Great British speakers

If you cast your minds back four years, it was rare for any UK high street brand entering a sales process to NOT get linked with the Issa Brothers.

After flexing their debt boosted muscles and buying Asda, they were linked with Caffè Nero, Boots, Subway and TopShop.

Many of these approaches were rebuffed outright and, frankly, in a fairly dismissive manner. Caffè Nero rejected their last-minute offer because they said Mohsin and Zuber Issa, who were trying to buy Asda at the time “didn’t understand its financial situation”.

It was reported at the time that EG would have paid all Caffè Nero’s landlords in full in the aftermath of the lockdown and pandemic.

A punt at Miss Selfridge and Topshop never got anywhere, with ASOS beating them to the punch.

In 2023 they were also said to be eyeing up Subway sandwich shops, a brand they were familiar with as many operated in some of their 6,300 petrol stations, including 340 Subways in the UK as part of franchising deals.

A slightly chippy leak to one newspaper claimed Subway didn’t properly appreciate the Issas. “So what better way to show who’s boss than owning them,” a source was reported to have said. The seller of the famous foot long meatballs sub was instead devoured by Roark Capital for $9bn at the end of a process that left the Issas and TDR Capital empty handed after their $8.75bn offer was outbid.

At the end of their attempted buyout binge Team Issa - backed by TDR Capital - ended up with Asda, and the posh fast food chain Leon, founded in 2004 by food evangelist Henry Dimbleby and John Vincent, for which the Issa Brothers and TDR, through EG, were reported to have splashed out around £100m for.

Since it started Leon had been in perpetual start-up mode. Even in its pre-pandemic pomp it posted losses, putting growth and expansion ahead of profits. In 2017 turnover was £76.3m, rising to £95m in 2018 with the restaurant estate standing at 61 sites.

In 2017 Spice Private Equity had splashed out £25 million for a “significant minority stake” encouraging the business to look further afield, with continuing rollouts and growth hitting its highest point in 2019 with turnover of £115.3m from 74 sites including in Washington DC and Virginia in the US.

But the pandemic hit the business hard. On 18th December 2020, the Company entered into a Company Voluntary Arrangement, which secured, amended and extended its banking facilities, but a small number of sites permanently closed.

A new dawn for the business came when EG acquired the business in April 2021 with a flurry of bullish rhetoric, tempered by the closure of the US business.

The Issa brothers Zuber and Mohsin

The Issas, ever ambitious and expansive, talked of doubling the pace of its store rollout programme, with John Vincent claiming the brothers would be “superb custodians” of the Leon brand and expand to a broader customer base outside of London, with more than 50 restaurants planned including 20 in 2022 alone.