Pizza Express has been widely reported widely over recent days in light of its long term debt and hire of unnamed financial advisors to assist with a plan to recover a healthy balance sheet. A true star of UK casual dining for more than 50 years having been founded in 1965 by Peter Boizot, Pizza Express thrived through the decades on UK high-streets up and down the country.
Today with 470 UK Pizza Express outlets the restaurant chain has for the past two years been forced to offset operating profits against interest repayments on its debts.
With circa 14,000 employees the current situation will be of huge concern to all people working with the group, as most reporting also highlights the demise of other casual dining chains like Jamie’s Italian. The UK casual dining sector for many is simply overcrowded, with too many similar propositions on UK high-streets competing for footfall in steep decline. Pizza Express still makes healthy profits and is meeting debt requirements, but the bigger question is for how long is this sustainable.
Pizza Express’ debt is £1.1 billion and interest repayments are £93 million per year. Last year operating profits were used to make the repayments but that then left a reported loss of £55 million.
The complete picture is not clear and has been predicted by financial commentators to not be in any immediate danger. That said, casual dining has seen many failures in recent years and the pressures on the sector are not looking like going away soon.
We spoke with Markus Kuger, Chief Economist at Dun & Bradstreet for his view of the situation:
“Growth in the UK restaurant sector has slowed since 2015 with the number of restaurants in the UK dropping for the first time in eight years. This sluggish growth mirrors the trend we’ve seen recently in the wider service sector and Dun & Bradstreet have assigned a ‘deteriorating’ outlook for the UK economy.
“Although business rate discounts introduced earlier this year will provide some benefit for smaller businesses, this is unlikely to have a significant impact for larger restaurant chains and franchises.
“With the employment rate at an all-time high, resource-heavy industries such restaurants are increasingly struggling to find employees and the 4.9% rise in minimum wage earlier this year is adding to operating costs while reduced consumer spending ahead of Brexit is also causing problems.”
The casual dining sector in the UK does not need any more bad news. We very much hope that Pizza Express having enjoyed being a star of the casual ding sector and the UK high-street restructures successfully and continues in its role.