The founder of Leon has warned that Labour’s tax policies risk triggering widespread closures across Britain’s hospitality sector, arguing that the current approach amounts to an “incredibly toxic tax regime”.

John Vincent said pubs and restaurants were facing mounting financial pressures that could force many businesses to shut their doors, as Leon itself prepares to close 20 sites following a period of heavy losses.

Mr Vincent said more chains would “disappear” under Chancellor Rachel Reeves’s stewardship if existing policies remain in place, claiming the economics of running a restaurant had become unsustainable.

He told the BBC that 36 pence of every pound taken by Leon goes directly to the Government and that, once all costs are accounted for, the business is left with “negative 10p”.

He highlighted what he sees as a structural imbalance between restaurants and supermarkets, noting that food bought in supermarkets is not subject to VAT while food sold in restaurants is charged at 20 per cent.

Rising business rates, he said, have added further pressure, increasing from around four per cent of sales to between eight and 10 per cent, while a three per cent rise in National Insurance contributions has pushed costs even higher.

With the hospitality industry traditionally operating on profit margins of around three per cent, he argued that the additional tax burdens have removed any realistic chance of profitability for many operators.

Mr Vincent co‑founded Leon in 2004 with Henry Dimbleby and Allegra McEvedy, positioning the brand as a healthier alternative to traditional fast food.

He sold the business to petrol station billionaires Mohsin and Zuber Issa in 2021, the same year the brothers acquired Asda, but bought it back in October after it had been losing around £10million a year.

Leon entered administration in December, and Mr Vincent said the business had “lost chutzpah, leadership and confidence” under its previous owners, becoming what he described as an “Asda business” run primarily for financial return.

Leon has now appointed administrators to oversee a Company Voluntary Arrangement, allowing the company to proceed with the planned closure of 20 restaurants.

LATEST DEVELOPMENTS

• Rachel Reeves warned ‘clock is ticking’ as six high street stores closing every day
• UK housing market: 2026 could be a good year to buy – but don’t expect a boom
• DWP launches new cash payment scheme from April – are you eligible?

Mr Vincent said the wider hospitality sector faces a difficult future under current tax policies and warned that only certain types of businesses would be able to survive.

“The only people that are going to survive are those that are selling crap food that’s not very good quality,” he said, arguing that quality‑led operators will struggle to compete under the existing cost structure.

Despite the challenges, Mr Vincent said his approach to business continues to prioritise values over profit, insisting that companies focused solely on making money often perform worse in the long term.

“If you focus on soul, purpose, then product, then business model, then people, then customer, then economics, the economics become good,” he said, adding that Leon would remain committed to its original principles despite the financial pressures facing the sector.

Leon recently entered administration and warned of imminent restaurant closures across the UK.

The fast‑food chain, which runs around 70 sites, says Covid‑era work‑pattern shifts, soaring taxes and energy costs have pushed the business into crisis.

Mr Vincent said the priority is shutting loss‑making restaurants and restructuring through a Company Voluntary Arrangement.

Leon employs roughly 1,120 staff, with job losses expected, though the company says it will try to redeploy workers where possible.

Sales fell 3.7 per cent to £62.5million last year, while losses narrowed but remained significant at £8.4million.

Landlord talks will take place over the coming weeks as Leon seeks to emerge as a “leaner” business focused on its founding principles.

All restaurants remain open for now, and Leon’s grocery products are unaffected by the restructuring.