Pizza Hut faces a debt problem as people spend less on dining out due to the cost-of-living crisis while it wrestles with substantial rises in energy and food prices.
Auditors have raised fears over whether the beloved family restaurant can continue trading, while experts claimed similar debt problems are hitting other similar chains.
The US firm’s biggest British franchise, which employs 4,000 employees across 152 outlets, must repay £31 million of its £73 million of debts by April next year.
Now, it is attempting to get revised terms on debt and acknowledged 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 danger and insisted ‘constructive’ refinancing discussions are anticipated to be concluded by the end of this year.
It comes amid continuing fears for the fate 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 beginning 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 a newspaper outlet that Pizza Hut is in a very difficult position and that the cost of living crisis has heaped a huge amount of pressure on restaurant chains, especially those who’ve taken on an onerous amount of debt.
She said that 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 frequently located in shopping centres or near offices, which are areas that have seen footfall decline since the pandemic, which when coupled with the fact that consumers have less money in their pocket, creates a potent and challenging problem even more difficult.
The facts surrounding the Pizza Hut developments are rather thin on the ground, as is something that will definitely be observed 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 £16.5 million last year.
Unfortunately, Pizza Hut is extremely costly. Their prices are not reasonable at all. If they didn’t charge so much for their Pizza’s because they’re greedy they might not be in so much trouble now. The quality isn’t too bad, but at the end of the day it’s junk food, and there are numerous other places that are much better for less.
Remember it’s just a pile of dough that you’re eating, along with perhaps a drink and a dessert and that it’s going to come to about £30 or more, and don’t forget you have to add the delivery fee as well.
They’re way overpriced and in some places, they won’t accept cash. I mean, who’s going to miss that? Pizza Hut is way overpriced and has been since it opened, but the cost of living crisis has definitely not helped these businesses and other smaller takeaways as well, and soon they will be a thing of the past, and then everyone will have to cook at home, instead of taking the easy way out and just ordering online.
Pizza is so inexpensive to make at home, and even with decent quality toppings, it’s still more affordable to make it at home. The problem is, there are a lot of youngsters these days who simply don’t know how to cook.
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