Strug­gling Pizza Ex­press to close dozens of UK restau­rants

The Daily Telegraph - Business - - Business - Oliver Gill By

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.

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