Pizza Express closures take hospitality job losses to 17,000

Chain could shed up to 1,100 staff and close up to 70 of its 449 UK outlets as Covid-19 compounds sector deep problems

Pizza Express has become the latest chain to announce it is closing restaurants as the coronavirus pandemic causes a domino effect on Britain’s high streets, claiming 17,000 jobs in eateries and other food outlets in a matter of months.

The company confirmed plans on Tuesday to use a company voluntary arrangement (CVA) – an insolvency process that allows it to close outlets and cut rents – that could result in the closure of as many as 70 of its 449 UK restaurants. The plan could cost as many as 1,100 jobs.

The gloomy update comes just as the government’s Eat out to help out discount dining scheme has started. The scheme aims to help get the country’s hospitality industry back on its feet, with 72,000 cafes, pubs and restaurants offering diners up to £10 off their food bill. The giveaway is expected to cost the taxpayer £500m.

Pizza Express said customer demand had been encouraging at the initial group of 60 restaurants that reopened in early July. It now has 166 venues open and is taking part in the discount scheme.

But Zoe Bowley, who runs Pizza Express in the UK and Ireland, said: “The UK-wide lockdown has hit the hospitality industry particularly hard. It is with a heavy heart that we expect to permanently close a proportion of our restaurants.”

Mid-market restaurants had been suffering from heavy competition, rising costs and slowing interest from diners even before the pandemic. Having to close for several months has tested their finances to the limit and beyond. Some have run out of money, and the prospect of the government winding down its furlough scheme is forcing them to take difficult decisions.

A Guardian analysis of the shakeout since lockdown restrictions were imposed in March shows that about 12,000 jobs have been eliminated in a wave of administrations and financial restructurings that have jettisoned the weakest performing outlets.

That figure rises to 17,000 if the 5,000 job losses announced by the owner of Upper Crust and Caffè Ritazza, are included.

Although still a popular choice with diners, Pizza Express was hobbled by its huge debts before the crisisstruck. The CVA is linked to a debt-for-equity swap agreed with the company’s bondholders that reduces its debt pile from £735m to £319m.

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As part of the process, Pizza Express has hoisted a for-sale sign, but if no buyer bids more than its secured bondholders, control of the business will pass to them, the company said.

Pizza Express has been operating since 1965, when Peter Boizot opened the first branch in Soho, London. It has since been through several private equity owners and stock exchange flotations, most recently changing hands in 2014 when it was bought by the Chinese private equity firm Hony Capital in a £900m deal.

The chain employs about 11,000 people in the UK.

Pizza Express said it had received a £144m injection from its existing creditors, which was being used to pay for the refinancing and the costs of reopening its UK restaurants.

Contributor

Zoe Wood

The GuardianTramp

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