Pizza Hut has become the latest restaurant chain to put a financial restructuring on the menu by hiring advisers to explore the possibility of an insolvency agreement that could entail significant job losses.
Sky News has learnt that Pizza Hut Restaurants, which employs thousands of people in Britain, has instructed Alvarez & Marsal, the professional services firm, to examine the merits of a company voluntary arrangement (CVA).
Sources said that a final decision had yet to be taken by the chain but that a CVA was “a distinct possibility”.
It is unclear how many sites or jobs might be at risk under any restructuring process.
Pizza Hut traded from 244 restaurants in the UK prior to the coronavirus outbreak, the vast majority of which have since reopened.
213 of its restaurants will be trading by 10 August, with a view to reopening the remainder as soon as possible, the company said on Wednesday.
In a statement, a spokesman said: “Despite government support, and entering lockdown from a place of strength, the cost of lockdown combined with reduced trading levels has had a substantial impact on the whole restaurant sector.
“Along with many other businesses, we are looking at ways to minimise that financial impact, while continuing to trade as usual.
“Whether this will require financial restructuring in the form of a CVA or otherwise is as yet undecided.”
The spokesman added that Pizza Hut employed 5,700 people in the UK.
Pizza Hut’s bigger UK rival, PizzaExpress, is preparing to close roughly 75 outlets under a proposed CVA that is expected to be launched imminently.
So many casual dining chains have turned to insolvency mechanisms to expedite cheaper rent deals with landlords that those which have not now face a significant financial disadvantage.
Most commercial property-owners are being asked to agree to turnover rent deals in order to aid their tenants’ survival prospects.
Since the start of the pandemic, the Café Rouge owner Casual Dining Group, Bella Italia’s parent, Azzurri Group, and Carluccio’s have fallen into administration.
Byron, Prezzo, Itsu and Wahaca are among those which have called in advisers to examine their financial positions, while A&M itself has been hired to help Pret a Manger with rent negotiations.
Pizza Hut’s fortunes had improved prior to the coronavirus outbreak, following a long period of under-performance.
The company’s chief executive, Jens Hofma, orchestrated a management buyout in 2018, with backing from Pricoa Capital, a financial investor.
The business trades in the UK under franchise from its US-based owner.
Hospitality chiefs have largely praised the government’s attempt to reinvigorate the sector through the “Eat out to help out” scheme, to be launched next month.
There remain, however, grave concerns about the long-term survival of many chains given the impact of COVID-19 on consumer confidence and continued implementation of social distancing measures.
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