Pizza Express has announced that it could close up to 67 restaurants as part of a major restructuring plan, placing 1,100 jobs at risk.
It comes as the group said it has reached an agreement with its secured creditors and majority shareholder, Hony Capital, for a recapitalisation and restructuring transaction in a bid to strengthen the group.
Following an “extensive review” of its operations, the group plans to launch a CVA “in the near future”, in a bid to improve operational performance by reducing its UK restaurant estate and rental cost base “in response to a significantly more challenging trading environment”.
While the group noted the outcome was yet to be decided, it confirmed the process may “regrettably” result in the permanent closure of around 15% of its UK estate, equating to 67 sites, with up to 1,100 jobs at risk.
In its latest update, the group said: “This decision is a very difficult one; however, against the current unprecedented backdrop, PizzaExpress believes reducing the size of its estate will help it to protect 9,000 jobs.
“Should the proposals go ahead, the company will look for redeployment opportunities both internally and externally for those employees impacted, and also offer outplacement support. Exact details of the future restaurant estate have not yet been agreed and will be announced when the CVA is formally launched.”
In addition to the CVA and resulting closures, the group has also placed itself up for sale. The sale process will commence today (4 August), and is being led by Lazard and Co.
Its secured creditors have also committed a new facility of up to £144m, while the group plans to de-leverage its debt from £735m to £319m.
Group CFO, Andy Pellingotn, said: “Today’s agreement with our share and debt holders provides us with a significantly more robust balance sheet as well as material additional funding.
“It is a complete solution to our balance sheet issues and creates strong foundations to build on for future success.”
He added: “While we have had to make some very difficult decisions, none of which has been taken lightly, we are confident in the actions being taken to reduce the level of debt, create a more focused business and improve the operational performance, all of which puts us in a much stronger position.
“We can now plan to invest in both our UK&I and International businesses as well as support our teams as they return to work.”
Zoe Bowley, UK&I managing director, added: “While the financial restructuring is a positive step forward, at the same time we have had to make some really tough decisions.
“As a result, it is with a heavy heart that we expect to permanently close a proportion of our restaurants, losing valued team members in the process. This is incredibly sad for our PizzaExpress family and we will do everything we can to support our teams at this time”.