Pizza Express is to close up to 75 of its restaurants as part of a rescue plan which could put more than 1,000 jobs at risk.
The restaurant chain is lining up a company voluntary arrangement (CVA) – an insolvency process which allows it to exit stores and cut rents – linked to talks with bondholders over its heavy debt burden.
Founded in 1965 in Soho, London, Pizza Express is now ubiquitous on British high streets, with 470 UK restaurants and a further 150 outlets internationally. It employs 8,000 people in the UK.
Hony Capital, a Chinese company, bought Pizza Express in 2014 in a £900m deal, made shortly after the restaurant chain opened its first branch in Beijing. The investment firm hoped to drive the growth of Pizza Express in China.
But Hony could lose control of Pizza Express to bondholders under a debt-for-equity swap. Talks over restructuring began in October as the company struggled under heavy debts, which reached £1.1bn by the end of December 2018, the last year for which accounts are available.
The chain has been hit by weeks of enforced closures in an attempt to control Covid-19 but had already been suffering from rising costs, strengthening competition and slowing consumer confidence.
While the company declined to comment on its plans, a CVA is expected within weeks. The final number of closures and extent of rent cuts will depend partly on the progress of formal talks with landlords, according to Sky News.
Restaurant businesses have been permanently closing their doors as diners are expected to shy away from eating meals at outlets for some time to come owing to fears over coronavirus as well as pressure on household finances during the expected recession.
Meanwhile, Azzurri, the owners of Ask and Zizzi, is expected to close restaurants as part of a takeover deal via a pre-pack administration, while Casual Dining Group, the owner of Bella Italia, Café Rouge, and Las Iguanas, permanently closed 91 outlets when it went into administration this month.
In June the Restaurant Group, which owns Frankie & Benny’s, and Garfunkel’s, said it would close up to 120 restaurants, with almost 3,000 jobs losses, while more than 1,000 Carluccio’s staff lost their jobs as part of a rescue deal in May.
The smaller chain Bistrot Pierre has been bought out of administration, closing six outlets, the luxury burger group Byron is lining up administrators, and Prezzo and Busaba are urgently looking for new investors.
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