By Andrew Sangster
BrightReasons Group, the 187-strong restaurant chain best known for its Pizzaland brand, is understood to be seeking trade buyers after suffering a tough trading period during which it chalked up losses of £2.5m.
The chain, which called off a planned flotation on the London Stock Exchange at the end of 1994, is believed to have talked to a number of companies over the past few months.
Chairman and chief executive Michael Guthrie refused to comment on whether a sale was imminent. But he admitted: “We are constantly receiving expressions of interest. After all, we are the largest non-quoted independent restaurant company.”
Both Whitbread and City Centre Restaurants are thought to have been approached about buying BrightReasons. However, analysts who spoke to Caterer predicted that the chain would not achieve a good price. “Pizzaland is not a strong brand. The outlets are in the wrong places and it is trading in an unfashionable part of the market,” said one City source.
Another analyst criticised BrightReasons for being too focused on price. “Product quality is an ongoing issue with them,” he said.
The sale rumours follow a disappointing set of financial results for the company during the year ended 30 September 1995. The figures, which were lodged at Companies House only a few weeks ago, show pre-tax losses were £2.5m compared with a restated pre-tax profit of £4.1m for the previous year.
“We were severely hit by the extreme and long hot weather during 1995,” said Mr Guthrie. He added that the proposed flotation, which at one point looked as though it would value the company at £70m, was the main cause of a £3.7m exceptional charge.
The direct costs incurred preparing for the aborted listing totalled £1.3m. There were also reorganisation costs of £2.4m, largely a result of cutting back a management structure that had been beefed up to satisfy the City, Mr Guthrie said.
During the 1996 financial year, which has just ended, Mr Guthrie claimed there had been a “more than a full recovery”.
The focus was now on expanding the Bella Pasta brand, both at new sites and through switching some existing Pizzaland sites.