PizzaExpress has formally launched its company voluntary arrangement (CVA) following the impact of the Covid-19 lockdown on the business, which will see the closure of 73 of the group's UK restaurants and 1,100 job losses.
Although the majority of PizzaExpress' UK restaurants were trading profitably before lockdown, earnings before interest, tax, depreciation and amortisation (EBITDA) across the estate had been declining for the past three years. Compounded with the impact of the Covid-19 outbreak on the casual dining market, the group said its rental cost base is no longer sustainable and the CVA proposals include reduced rental agreements, and a temporary move from quarterly to monthly rents.
The group is also exploring a sale; if a bid from a third party that is higher than the offer of the holders of the group's existing senior secured notes is not secured, this will trigger a financial restructuring involving around £1b debt being written off, and the injection of up to £60m into the business for future growth plans, with ownership control of the group being acquired by holders of the existing senior secured notes.
Zoe Bowley, UK and Ireland managing director, said: "Unfortunately, the impact of the global pandemic has meant that we have had to make some incredibly tough decisions to safeguard PizzaExpress for the long term. Today we have confirmed that 73 of our pizzerias are proposed to close permanently. In most cases, there is another PizzaExpress nearby, either already open or reopening soon, to welcome our customers.
"Our focus is on our people whose jobs are impacted and we will be doing everything we can either to redeploy them or to support them in finding roles elsewhere. Hard as this process is, it will protect the jobs of over 9,000 of our colleagues and provide a strong footing for PizzaExpress to meet future challenges and opportunities."
The CVA requires the approval of at least 75% of its creditors on a meeting scheduled for 4 September, and only applies to the group's UK restaurants.
PizzaExpress was founded by Peter Boizot in Soho in 1965 and now has more than 600 restaurants globally, including 454 PizzaExpress pizzerias in the UK, five of which are franchise sites.