On Monday, it was widely reported that Pizza Express was facing financial woes and a mountain of debt.
The restaurant chain has hired advisers to prepare for debt talks with creditors in a bid to organise the company’s debts, which currently stand at £665 million. The pizza chain is reportedly in early talks to refinance debts.
According to sources, the company is not currently considering a CVA (Company Voluntary Agreement) or close to collapse.
What has caused the debt?
It is believed that Pizza Express is another victim of the so-called “casual dining crunch” which is the effect of customers turning their back on popular food chains, including Jamie’s Italian which collapsed back in May. At the end of June of this year the number of restaurants falling into insolvency had increased by 25% to 1,412 compared to 2018, according the accountancy firm UHY Hacker Young.
Further to this assessment, UHY Hacker Young said that the main qualitative cause of this “crunch” was due to the rapid growth of the casual dining sectors since 2008, resulting in an oversaturated market, which continues to go through a dramatic shakeout, leading to the collapse of many restaurant chains. In Pizza Express’s case, the company paid out £93 million in interest payments in 2018. It also reported a pre-tax loss of £55m on sales of £543m in the same year. Earlier this year Pizza Express said underlying profits fell 7.7% to £32.4 in the six months to the end of June.
How much debt is there?
The company is set to pay the first installment of repayments totalling £465 million by August 2021. It is then required to make of repayment of £200 million in unsecured notes by 2022.
Overall, the chain is reported to have had debts of £1.12 billion by the end of last year, which works out at £1.6 million per restaurant. However, the debt currently stands at £665 million.
What could happen next?
Aside from the repayments and restructuring of debts, which could potentially save the company from any further issues, the company has not reported the potential for collapse, as previously stated.
Pizza Express has been operating since 1965, employs 14,000 people, while owning 470 outlets in the UK and a further 150 worldwide. With many similar chains suffering such a horrific fate, the popular Italian food chain is yet to hint at any potential resource losses. However, only the future will see the fate of one of the UK’s best loved restaurants.