Cautious consumers blamed for profits drop at Pizza Express
THE casual dining crunch has taken another bite out of the bottom line for Pizza Express.
A mix of rising business costs and customers tightening their belts pushed underlying profits down 7.7pc to £32.4m for the six months to June.
A string of popular chains such as Prezzo, Carluccio’s and Byron have either closed sites or sought rent cuts as they struggle with higher rents, business rates and wage bills, while 22 out of 25 of Jamie Oliver’s restaurants closed earlier this year.
Jinlong Wang, Pizza Express chief executive, said the company “was not immune to the cautious consumer environment”.
However, he struck an upbeat note saying it has remained “resilient” despite “sector-wide challenges”.
Group sales were up 2.6pc, mostly driven by sites outside Britain. The international business, which accounts for a fifth of profits, posted a 1.9pc rise in like-for-like sales, but UK sales were broadly flat.
The first Pizza Express restaurant opened on Wardour Street in London’s Soho in 1965 and now it has more than 600 sites globally. The chain was gobbled up for £900m in 2014 by Hony Capital, a Chinese private equity firm. Its most recent accounts show the chain had net debt of £1.1bn in 2018 and made an annual pre-tax loss of £55m.
Pizza Express is now taking a cautious approach, focusing on revamping existing sites rather than opening new locations. Mr Wang said: “We are creating more sociable pizzerias with a greater focus on our kitchens.” He is also banking on low-calorie pizzas and vegan options to lure more customers. “While we expect the markets to remain challenging,” he said, “we believe that we will continue to deliver a resilient performance across the remainder of 2019.”
The business is also facing challenges from smaller, more nimble rivals such as Franco Manca, whose owner Fulham Shore is chaired by David Page, the former Pizza Express boss. The company said in a trading update yesterday that group revenues for the first 21 weeks of its financial year were higher than the same period last year.
Fulham Shore, which also owns The Real Greek chain, opened five Franco Manca outlets in the period in Greenwich, Birmingham, Exeter, Leeds and Edinburgh, with the 50th under construction in Manchester. It also has a summertime outlet on the Italian island of Salina. More sites for both chains are planned.
Shares fell 1.3pc, valuing Fulham
Shore at about £63m.