The pizza chain has been hit by the rising cost of food, increases in the national minimum wage and national living wage, as well as business rate rises and high rents
PIZZA Express could be the next casualty on the high street due to pressure from mounting debts and rising business costs.
The restaurant chain has yet to publish its end of year results for 2018, but its 2017 annual report reveals that the firm had debts comprising of a whopping £1,077.4million – or just over £1BILLION.
It said it had been impacted by “well-publicised cost headwinds”, such as rising food costs, increases in the national minimum wage and national living wage, as well as business rate rises and high rents.
Meanwhile, its results for the first half of 2018 revealed that adverse weather conditions had a “significant impact” on sales.
At the time, Jinlong Wang, chairman and chief executive officer of Pizza Express said that the group expects the “UK trading environment to remain challenging”.
But the firm says the debt does not mature for three years, meaning there’s no short-term need to refinance or pay the £653million back.
Pizza Express adds that the other £425million is a loan from the parent company that doesn’t have to be repaid.
Credit rating agency Moody’s downgraded its rating of Pizza Express just last month from B3 to Caa1. Top rated companies will have a rating of Aaa in comparison.
Moody’s said the downgrade was in light of Pizza Express’ recent performance, with margins under pressure and a deterioration in its performance overseas.
It added that the chain will continue to be challenged in 2019 by market conditions and strong pressure from its rivals.
Pizza Express has been owned by Hony Capital, a Chinese private equity firm, since July 2014.
It has over 490 restaurants across the UK and Ireland, as well as over 100 sites worldwide. Use its store locator tool to find your nearest branch.
But Pizza Express isn’t the only restaurant chain to be suffering.
Jamie Oliver announced plans to close 12 branches of Jamie’s Italian last year as his restaurants lost £9.9million in 2017.
While Byron Burger also announced plans to close 20 restaurants in order to keep the business afloat.
Later in the year, Carluccio’s announced that it would have to close 30 branches as part of restructuring plans.
And Gourmet Burger Kitchen (GBK) also announced plans to close 17 branches late last year.
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