Fight to keep Pizza Hut open after Covid and cost of living crisis

Fight to keep Pizza Hut open after Covid and cost of living crisis

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Fight to keep Pizza Hut open: How Covid and cost of living crisis are threatening to drive beloved chain out of business – making it latest victim of Britain’s declining High Streets

DAILY MAIL

Pizza Hut faces a debt crisis as people spend less on eating out due to the cost-of-living crisis while it grapples with significant rises in energy and food prices.

Auditors have raised fears over whether the beloved family restaurant can continue trading, while experts claimed similar debt issues are hitting other similar chains.

The US firm’s biggest British franchise, which employs 4,000 workers across 152 outlets, must repay £31million of its £73million of debts by April next year.

Now, it is trying to get revised terms on debt and admitted it could breach its banking covenants later this year in a ‘severe but plausible downside scenario’.

But bosses at Pizza Hut UK – which is the dining franchise and does not include the delivery or takeaway arms – have denied the chain is in trouble and insisted ‘constructive’ refinancing talks are expected to be completed by the end of this year.

It comes amid continuing fears for the future of UK high streets, with the British Retail Consortium revealing last month that 6,000 shops have closed in the last five years and the overall vacancy rate has increased since the start of the year.

Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown, said Pizza Hut UK outlets had also been affected by their locations in shopping centres or near offices.

She told MailOnline: ‘Pizza Hut is in a very difficult position. The cost-of-living crisis has heaped a huge amount of pressure on restaurant chains, and especially those who have taken on an onerous amount of debt.

‘Unfortunately, it’s increasingly looking like Pizza Hut is within this camp, and is the latest victim in the cohort of companies that are being stung by higher interest rates, which makes repayments on fat loans a painful reality.

‘Pizza Hut restaurants are also often located in shopping centres or near offices, which are areas that have seen footfall decrease since the pandemic, which when coupled with the fact that consumers have less money in their pocket, creates a potent and difficult situation even tougher.

‘The details surrounding the Pizza Hut developments are relatively thin on the ground, as is something that will certainly be monitored closely by fans of the chain.’

Pizza Hut UK is being charged interest on its debt of up to 14 per cent, and has posted an operating loss for the past two years – including £16.5million last year.

It is continuing to grapple with soaring inflation following the pandemic and Russia’s invasion of Ukraine as it recovers from mass closures during Covid-19.

The company has also been hit by labour shortages, wage inflation and the cost-of-living crisis hitting household budgets.

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