Prezzo to cut hundreds of jobs as 94 sites face axe

The Italian chain is latest casualty in the restaurant sector as rising costs and consumer cutbacks bite

AS MANY as 1,400 restaurant workers are at risk of losing their jobs as troubled Italian chain Prezzo moves to close 94 sites in an attempt to keep the company trading.

The deal has been agreed by nearly 90pc of creditors as part of a company voluntary arrangement, a form of insolvency that allows a business to keep trading.

Prezzo, which has roughly 300 sites, is the latest casualty in the restaurant sector. The rescue deal further exposes the huge pressures the industry has found itself under at a time when business rates and other costs are rising and consumers are watching what they spend.

It is understood the company will try to offer workers roles at other restaurants, in a bid to bring the number of job losses down to nearer 500.

Some of the restaurants set for the axe operate under other brands. Private equity owner TPG runs various casual dining concepts through Prezzo’s parent company, including Mexican eateries Chimichanga and MEXICO, and chicken, ribs and burger chain Cleaver.

Besides the closures, which are likely to happen in April and May, 57 sites will pay reduced rent of between a quarter and half of current rates for up to two years.

Jon Hendry-pickup, Prezzo’s chief executive, said: “While we continue to be profitable, the pressures on our industry have been well documented.

“Despite this being a tough decision, the support given today by our creditors shows that they believe we have the right approach to transforming Prezzo in the eyes of teams, customers and stakeholders.

“It has been a challenging time during the CVA process.”

TPG paid £300m for the business in 2014 and funded a huge expansion, which has now come back to haunt it.

The Sunday Telegraph revealed earlier this month that Prezzo owed its banks and suppliers almost £220m, split between Barclays Bank and the Royal Bank of Scotland, as well as scores of unsecured creditors.

Meanwhile, the fate of 2,500 Maplin workers remains in the balance after unsuccessful attempts to find a buyer for the stricken 217-store electronics chain.

The retailer, which is owned by private equity firm Rutland Partners, appointed PWC to oversee an administration at the end of February after rescue attempts failed.

It is thought that if a white knight fails to emerge in the coming days, store closures could be announced as soon as next week.

It comes in a dismal first quarter for the UK high street, with flooring company Carpetright also announcing ear- lier this week the prospect of store closures.

On the same day New Look agreed a CVA with creditors that will see it shut 60 stores, resulting in the loss of up to 980 jobs.

A host of other restaurant chains including Jamie’s Italian, Byron and Strada have all been forced to close sites and secure lower rents on other locations this year to avoid disappearing altogether.

£220m The amount Prezzo owed to its banks and suppliers, split between Barclays and RSB, as well as scores of unsecured creditors