Tough decisions made as Pizza Express fights to secure its future post-pandemic.
- Pizza Express launches a CVA to reduce restaurant estate and rental costs.
- 73 restaurants will close, putting 1,100 jobs at risk.
- The decision follows three years of declining EBITDA and pandemic-related disruptions.
- CVA aims to reset leasehold obligations and transition to monthly rents.
- Ongoing competitive sale process for the group is being led by Lazard and Co.
Pizza Express has officially initiated a Company Voluntary Arrangement (CVA) to streamline its restaurant operations and cut down on rental expenses in the wake of the pandemic. This move will lead to the permanent closure of 73 of its restaurants, resulting in approximately 1,100 job losses. Earlier this month, the casual dining chain revealed it had reached an agreement with its secured creditors and majority shareholder, Hony Capital, to undergo a recapitalisation and restructuring process. Previously, the company indicated that 67 locations were at risk of closure after a thorough review of its operations. The latest announcement highlights that the decision to pursue a CVA was prompted by a decline in EBITDA over the past three years, despite the company being profitable before the lockdown. The Covid-19 pandemic has severely disrupted the casual dining industry, leading to a significant drop in revenue and increased costs, making the current rental cost structure unsustainable. The proposed CVA aims to reset lease obligations, allowing for a more efficient and better-invested restaurant portfolio in the UK, while also addressing outstanding arrears and rental agreements. The company plans to shift from quarterly to monthly rent payments as part of this restructuring. Alongside the CVA, Pizza Express is also engaged in a competitive sale process, which began on August 4 and is being managed by Lazard and Co. Zoe Bowley, the UK&I managing director, stated that the CVA proposal follows constructive discussions with the British Property Federation and various landlords. She acknowledged the difficult decisions made to ensure the long-term viability of Pizza Express, confirming the closure of 73 pizzerias. Bowley reassured that in many cases, there are nearby Pizza Express locations ready to serve customers, and the company is committed to supporting affected employees in finding new roles or redeploying them within the organization.
Factuality Level: 8
Factuality Justification: The article provides accurate information about Pizza Express’s decision to launch a CVA, the number of closures and job losses, reasons behind it (declining EBITDA, Covid-19 impact), and the company’s plans for its estate. It also includes quotes from the UK&I managing director, Zoe Bowley, which adds credibility.
Noise Level: 3
Noise Justification: The article provides relevant information about Pizza Express’s decision to launch a CVA due to the pandemic’s impact on its business and the need for restructuring. It also mentions the number of closures and job losses. However, it could provide more context on the broader implications of this event in the restaurant industry or insights into how other businesses are dealing with similar challenges.
Financial Relevance: Yes
Financial Markets Impacted: Pizza Express, Hony Capital, British Property Federation, landlords
Financial Rating Justification: The article discusses Pizza Express’s CVA proposal to reduce its restaurant estate and rental costs due to the pandemic’s impact on its operations and financial performance. This affects the company’s financial situation and potentially impacts related parties like Hony Capital, British Property Federation, and landlords.
Presence Of Extreme Event: No
Nature Of Extreme Event: No
Impact Rating Of The Extreme Event: No
Extreme Rating Justification: There is no extreme event mentioned in the text.
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