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Personal equity-owned Italian restaurant chain Prezzo is planning to shut a couple of third of its websites, placing greater than 800 jobs in danger, in an indication of how excessive inflation and the price of residing disaster are squeezing the UK casual-dining sector.
Prezzo, which was purchased out of administration by non-public fairness group Cain Worldwide in 2020, introduced on Monday that it will shut 46 loss-making websites throughout the UK, slicing its property to 97 eating places and decreasing its workforce to about 2,000 employees.
Dean Challenger, Prezzo’s chief govt, mentioned the previous three years —protecting the pandemic when Covid-19 restrictions led to a widescale shutdown of the hospitality business — “have been among the hardest instances I’ve ever seen for the excessive avenue”.
He added that “the price of residing disaster, the altering face of the excessive avenue and hovering inflation has made it inconceivable to maintain all our eating places working profitably”, including that the closures introduced on Monday would have an effect on websites “the place the post-Covid restoration has proved more durable than we had hoped”.
The announcement reveals the pressure that hovering price inflation within the aftermath of Russia’s invasion of Ukraine is placing on casual-dining operators as they attempt to get better from the pandemic. Prezzo recorded a lack of £22.4mn in 2021, in line with its newest firm accounts.
Prezzo mentioned it had confronted double-digit wage inflation prior to now yr and its utility payments, which now account for 9 per cent of whole revenues, had greater than doubled over the identical interval. The worth of elements similar to pizza sauce and spaghetti had risen 28 per cent and 40 per cent respectively over the previous yr, the chain added.
The variety of casual-dining shops throughout the UK fell 13 per cent within the three years to March 2023, in line with the Native Information Firm. Final month, Frankie & Benny’s proprietor The Restaurant Group mentioned it will shut 35 of its worst-performing websites, because it faces stress from activist traders over its low share value.
Prezzo mentioned its property would focus extra on procuring centres, retail parks, vacationer locations and journey hubs to raised cater for altering client habits. Challenger added that he believed the “robust choices” taken by administration would safe its future for “many extra years to come back”.
Tom Pringle, joint head of restructuring at legislation agency Gowling WLG, mentioned the closures have been a “clear instance of the financial fallout of extended excessive inflation”. “Large rises within the prices of power and meals are eroding buying and selling margins, and concurrently making it troublesome to cross these prices on to clients who’re seeing the identical pressures at residence,” he added.
Prezzo final introduced a spherical of web site closures and job cuts in early 2021 after it was purchased out of administration by Cain.
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