Struggling Pizza Express to close dozens of UK restaurants
PIZZA Express is preparing to shut dozens of restaurants as Britain’s biggest casual dining chain grapples with the fallout from coronavirus and a cumbersome £1.1bn debt pile.
About 75 of the chain’s 470 UK outlets are under threat as it races to restructure its finances.
Formal talks with landlords over the closures, first reported by Sky News, are due to begin next week.
The radical action comes as bondholders seek to take control of the Chinese-owned firm.
Hony Capital originally fended off attempts by lenders, which raised the prospect of closures and a debt-forequity swap with the loss-making company last year.
The Beijing-based private equity house bought up tens of millions of pounds of bonds this year and in March secured £70m of additional funding from distressed debt fund HPS.
However, talks between senior lenders, owed £465m and due to be repaid in little more than a year, were reopened after the coronavirus pandemic hit. Discussions are understood to be consensual.
The lending group, advised by US boutique bank Perella Weinberg and believed to include the hedge funds such as Cyrus Capital and HIG Bayside, want to shut stores as part of a wider plan to put the business back on a firmer footing.
The casual dining sector, under pressure after years of oversupply prior to the pandemic, has been brought to its knees as Britain went into lockdown.
A slew of brands such as Cafe Rouge, Bella Italia, Byron, Zizzi, Carluccios and Prezzo are at risk of being erased from the high street as their owners either file for administration or put the businesses up for sale.
Despite the lockdown being lifted on the hospitality sector earlier this month, industry sales remain well below historical norms.
Pubs and restaurants sales fell 40pc compared with the prior year, according to industry research.
The Coffer Peach Business Tracker found that around seven in 10 pubs opened for business following the easing of restrictions on “Super Saturday”. Only 17pc of restaurants opened their doors, however.
Experts said that the UK had fared much better than other countries. Karl
‘About 75 of the chain’s 470 UK outlets are under threat as it races to restructure its finances’
Chessell, director of CGA, which produces the Coffer Peach Tracker, said: “Trading at almost 60pc of pre-Covid norms is actually a better performance than many other markets internationally, such as the US, experienced on reopening. The sector still has a long way to go, but this sets the benchmark against which the speed of recovery will be judged.
“Although restaurants have been taking an even more cautious approach we know more will be open next week.”
Pizza Express was bought by Hony for £900m in 2014. It has more than 600 restaurants globally and employs 14,000 people – more than half in the UK.
The chain declined to comment.