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Pizza Express suffers as cost pressures take a slice out of earnings

Biting conditions in the UK restaurant sector took a slice out of earnings at Pizza Express as higher wages, food price inflation and rent costs weighed on the chain.
Improved sales both at home and abroad failed to counter the potent combination of cost pressures which have wreaked havoc on the casual dining sector and caused several casualties including at Jamie’s Italian and Prezzo, which have both had to close sites and pay reduced rents on others in a bid to keep trading.
Executive chairman Jinlong Wang said he was pleased the chain had managed to grow UK and Ireland like-for-like sales after two consecutive years of falls but acknowledged in spite of a return to form, earnings before interest, tax, depreciation and amortisation dropped nearly 9pc to ?94.6m in 2017. The company did not report its pre-tax profits, but the latest data on Companies House shows it made a made ?17m pre-tax loss in the 18 months to the end of 2016.
“Our international business also delivered an exceptional performance with like-for-like sales increasing by 8.2pc but as expected this growth has been offset by the widely publicised sector cost headwinds in the UK,” he said.
Pizza Express: A slice of history
Mr Wang said the company opened 13 sites last year including the first Pizza Express site operated by its motorway services franchise partner Welcome Break at Oxford services. It also refurbished 25 sites, one of which was the first of its ‘Pizza Express Live’ sites, which hosts jazz performances.
“Throughout 2017, we explored innovative ways to diversify Pizza Express and reach new audiences, such as the trial of a Pizza Express ‘Boxed’ concept, a mobile site able to provide a taster of the Pizza Express experience at events such as the British Summer Time festival,” Mr Wang said.
He added the chain’s supermarket range of pizzas and pastas had now reached ?100m in sales making it one of the UK’s top hundred biggest retail brands.
Pizza Express suffers as cost pressures take a slice out of earnings

Former Pizza Express boss Richard Hodgson now runs Japanese restaurant chain YO! Sushi

Credit:
Graham Flack
Pizza Express, which was bought by Chinese firm Hony Capital in 2014 for ?900m, has been run by Mr Wang since May last year when former boss Richard Hodgson stepped down after four years in the role.
Mr Hodgson now runs the YO! Sushi Japanese restaurant business after its veteran boss Robin Rowland moved to the board as a non-executive director. 
Mr Rowland ran YO! for 18 years and grew the chain from just three London sites to 97 worldwide via three private equity deals, including latterly with Mayfair Equity Partners.
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