14,000 jobs at risk in Pizza Express crisis
Every restaurant ‘£1.8m in debt’
PIZZA Express was forced yesterday to deny it would fold under debts of £1.8million for each of its 620 restaurants.
The chain is said to be preparing for talks with creditors over a possible restructuring that would put 14,000 jobs at risk.
Founded in London in 1965, Pizza Express is credited with revolutionising casual dining in Britain.
But its latest accounts show it lost £55million last year and has plunged more than £1.1billion in the red. Covering the debt costs the firm £93million a year in interest.
Creditors are hiring financial advisers in an attempt to turn around the company although sources insisted that there was no prospect of an immediate collapse.
High street restaurants have been battered by the rising cost of food, staff, rent and rates. Jamie Oliver’s Italian chain went into administration in May and Prezzo shut down 94 of its sites last year.
Pizza Express has tried to innovate with new menus, more vegan options and, in 2016, it launched a partnership with takeaway delivery company Deliveroo.
However its financial situation has deteriorated: the £55million loss last year being twice the figure for 2017/18.
The chain also has to pay back £650million of its debt within three years.
The company posted a 7.7 per cent decline in earnings to £32.4million in the first half of this year.
If Pizza Express does go into administration, creditors might take control of the UK business, while the company’s venture capitalist owners, Hony, could be left with the Chinese arm.
The private equity firm is known for buying established companies abroad and bringing their brand to China. It has used debt secured on Pizza Express’s UK business to finance expansion in China, where it has 56 restaurants.
The firm has used a company in the British Virgin Islands to extract £159million in cash since buying Pizza Express for £900million in 2014.
Sources close to the chain said it was ‘not a business that is contemplating a company
‘Battered by rising costs’
voluntary agreement or close to collapse’.
Pizza Express and its advisers Houlihan Lokey have declined to comment.
Representatives of the firm’s creditors were not available for comment last night.
An industry source said talks with creditors were not unusual but ‘could mean that covenants have been broken over its debt repayments’. In August, Pizza Express’s chief executive Jinlong Wang said: ‘Intense competition in the casual dining sector encourages innovation and we are constantly seeking ways to increase appeal to new and existing customers.
‘Looking ahead, whilst we expect both the UK and Ireland and international markets to remain challenging, we are confident in our ability to successfully appeal to customers and believe we will continue to deliver a resilient performance across the remainder of 2019.’
The chain was founded by Peter Boizot in Soho after he brought a pizza oven back from Italy. The Cambridge graduate, who later bought Peterborough United Football Club, died in December last year aged 89.
Founder: Peter Boizot