Three Plymouth restaurants and 35 jobs have been rescued through a company restructure that eliminated hundreds of thousands of pounds in debt. Rockets and Rascals, Black Cat Surf Club, and Terra Nova now continue trading under a new company with plans for growth, including the potential launch of a fourth venue.

The turnaround followed the collapse of Shred or Dead Ltd, which previously owned all three restaurants, into liquidation in December. The company, burdened with debts of £327,866—including £159,000 owed to HMRC—was struggling to manage its borrowings despite generating £1.2 million in annual sales. Founder Luke Toze described it as a “zombie” business, trapped in a cycle of servicing debt rather than reinvesting in growth.

Toze himself lost nearly £50,000 in the collapse but hopes to recover those funds through the new venture. He made the decision to liquidate Shred or Dead after consulting insolvency experts at Brailey Hicks, recognizing that keeping the restaurants afloat under the old structure would have led to inevitable job losses and financial strain for suppliers and landlords.

Now, with each café operating as a separate entity under a group structure, the businesses are profitable and better insulated from financial shocks. The new setup requires separate accounts and payrolls for each venue but provides security—ensuring that if one struggles, the others remain stable.

The restructure freed up capital, allowing for immediate investment in improvements that had previously been impossible due to mounting debt. Looking ahead, the company aims for steady growth and is considering opening another location.

However, challenges remain. National Insurance and Minimum Wage increases could add up to £50,000 in annual costs, forcing the business to adjust pricing. Toze believes customers will understand these necessary changes.

The Covid-19 pandemic created a volatile period, with lockdowns followed by the Eat Out to Help Out scheme, which boosted revenue but added unpredictability. Despite these challenges, the restaurants emerged from the pandemic in relatively strong shape.

Terra Nova, which opened in Devonport in 2022, had a slow start but is now profitable. Toze acknowledges that while Covid wasn’t the sole cause of Shred or Dead’s collapse, it contributed to the company’s struggles, compounded by the subsequent energy crisis. Energy bills skyrocketed from £700 to £3,000 per month, suppliers withdrew credit, and cash flow tightened, doubling supplier payments from £30,000 to £60,000 per month.

Despite these setbacks, Toze is optimistic about the future, confident that the new structure will allow the business to grow sustainably, free from the burden of past debts.