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Tough market conditions and extreme weather hit earnings at PizzaExpress

30 April 2019 by
Tough market conditions and extreme weather hit earnings at PizzaExpress

Tough market conditions and weather extremes in the UK hit PizzaExpress' earnings in 2018, despite a slight increase in turnover.

Group turnover grew by 1.6% in the year reaching £543m, however cost headwinds in the UK and challenging conditions in some international markets combined to see group earnings before interest, tax, depreciation and amortization fall by 15.3% to £80.2m.

In the UK, a cold snap followed by hot summer contributed to a 1% fall in like-for-like sales, although if these periods are discounted the group saw 0.1% growth.

The casual dining company's portfolio now extends to 104 sites worldwide, with 26 having opened in the year, four of which were in the UK and Ireland. Expansion has seen international markets grow to generate 20% of group sales.

Group chairman and CEO Jinlong Wang said: "Although 2018 was a challenging year for the casual dining sector, we are pleased with the overall group revenue growth of +1.6%. Sector-wide labour and property cost increases in the UK combined with more challenging conditions in some of our less mature international markets resulted however in a 15.3% decline in Group EBITDA.

"In the UK & Ireland, the unexpected snow in the first half of the year and sustained period of heat in the second half impacted the whole industry. Outside these periods of extreme weather, we were pleased with our resilient underlying like-for-like sales growth of +0.1%, which includes a strong Christmas performance.

"We have recognised the need to continually innovate to attract existing and new customers. Our business has continued to invest in significant customer-led research to enhance our existing brand proposition with increased focus on brand-led content and optimising performance across digital channels alongside new product, menu and service innovations. To facilitate this, we opened our new Global Innovation Centre in London, which has enabled us to accelerate the development of new products such as our new vegan and gluten free menus as well as seasonal ranges. We have also invested in our people, with our newly developed leadership programme which all head office, field-based and restaurant managers have now completed."

He added: "Looking forward, whilst we expect both the UK and international markets to remain competitive we are confident that our focus on customer-led innovation and investment in our brand and our people will put us in a strong position to succeed in this environment and continue to deliver a resilient performance."

During the year PizzaExpress invested £1m in future growth. Early in 2019 it relaunched its Oxford Circus site in a significant rebrand that could inform the rest of the firm's pizzerias. The site has been redesigned to make the open kitchen centre stage, while also offering 137 covers and the company's first defined bar space.

Earlier this month the firm also launched a new grab-and-go by-the-slice brand Za in London's Fenchurch Street.

PizzaExpress refreshes Oxford Circus site in new brand proposition>>

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