Love Brownies: Yorkshire cafe and bakery business goes into liquidation after suffering 'unsustainable losses' due to Covid-19 and cost increases
A Yorkshire-based brownie brand which recently opened a flagship café and shop in a luxury Leeds shopping centre has gone into liquidation, it has been confirmed.
Love Brownies Limited had suffered "unsustainable" losses after its performance was affected by the impact of Covid-19, increases in the price of raw materials and expansion costs.
A spokesman for RSM UK confirmed that Gareth Harris, a restructuring advisory partner at RSM was appointed on Friday 22 July as the liquidator of Ilkley-headquartered Love Brownies.
The RSM UK spokesman added: “All creditors and suppliers have been communicated with in accordance with our statutory requirements, so they are all aware of the situation, and this includes employees. We cannot provide further comment at this time."
Lee Teal, the founder and owner of Love Brownies, told The Yorkshire Post: "It's a family business and we have been through a horrendous few months. We just want to pick up the pieces and start again."
Mr Teal thanked all the company's staff and customers for their support and stressed that the company's website was still open and most of the company's franchise branches are still open and trading. .
Love Brownies opened a shop in Victoria Gate in Leeds last year. In 2019, the award-winning business opened a new bakery in a converted barn at Howgill near Appletreewick, on the Devonshire Estate.
The bakery was part of a major expansion strategy for Love Brownies.
A statement included in correspondence sent to creditors said: "Love Brownies Limited was founded in 2009 with the ambition of baking the ultimate chocolate brownie and making people smile.
"The company achieved significant initial success winning a number of awards including the prestigious three gold stars from the Great Taste Awards in 2015.
"In the past few years, the company has expanded both organically and through its franchise network, opening a number of new outlets in key locations.
The statement added: "Whilst this has led to increased revenues, the company has also been adversely affected by Covid 19, significant increases in raw material costs and spiralling expansion costs.
"As a result of this, the company incurred significant losses of £359,095 in the 10-month period to May 2022 which were unsustainable.
"The impact of these losses on cashflow resulted in the directors seeking investment from a third party known to them who had expressed an interest in purchasing the company.
"Unfortunately, after a period of working with the private investor, a suitable sale offer was not received and ultimately the directors sought advice to place the company into liquidation."
At a meeting on July 5, a creditors' voluntary liquidation was determined by the directors as the best option due to the inability to pay staff and for the business to continue trading, the statement said.
"The directors considered that it was unreasonable to ask staff to continue working knowing there were insufficient funds to enable wages to be paid at the end of the month.
"As a result a decision was taken to make all staff redundant on 11 July 2022 and meetings with staff to make them redundant took place between July 12 and 15 to allow a creditors' voluntary liquidation to be quickly progressed."
Last year, Love Brownies told our sister paper The Yorkshire Evening Post that it hoped to have a network of 80 branches across the country within five years.
The company's registered office was in the Wells Road Business Centre in Ilkley and it had trading addresses in Barden, near Skipton, Brook Street, Ilkley, Springfield Farm Business Park in Harrogate, Montpelier Parade in Harrogate and the Victoria Gate Shopping Centre in Leeds, according to the document sent to creditors.