14,000 jobs at risk in Pizza Ex­press cri­sis

Ev­ery restau­rant ‘£1.8m in debt’

Daily Mail - - News - By Tom Witherow Busi­ness Cor­re­spon­dent

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

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