- Business and Economics Editor Joel Hills explains Pizza Express's plight
Pizza Express has hired financial advisers ahead of crunch talks with creditors over the restaurant group’s soaring debts.
The restaurant chain has hired advisers to prepare for debt talks with creditors in a bid to organise the company's debts.
- How much debt is Pizza Express in?
Pizza Express has current debts of £665 million.
The company has to pay the first instalment of its repayments, worth £465 million in secured bonds, by August 2021.
Its next repayment for £200 million in unsecured notes is due to repaid by the following year.
According to the restaurant chain's most recent accounts, it had debts of £1.12 billion by the end of last year, which works out at £1.6million per restaurant.
- Is Pizza Express close to collapse?
Sources closes to the company said it is "not a business that is contemplating CVA (Company Voluntary Agreement) or close to collapse."
A CVA is a procedure that allows a company to settle debts by paying only a proportion of the amount it owes to creditors.
It is understood the talks with creditors are intended to look at a possible reorganisation of its large debts.
An industry source told PA that these talks with creditors are “not unusual”, but “could mean that covenants have been broken over its debt repayment”.
Debt covenants are terms set out between creditors and companies which typically state limits or financial thresholds which the company is not allowed to breach.
This could involve certain sales or profit expectations.
However Financial consultants Langdon Capital tweeted: "Pizza Express reportedly about to engage in talks with creditors. Not suistanable."
- How has the company performed this year?
In the first half of 2019, Pizza Express reported a 0.2% rise in like-for-like sales amid difficult trading conditions.
The company also posted 7.7% decline in underlying earnings to £32.4 million for the period, with the slump blamed on rising costs.
- What other restaurant chains have closed?
The casual dining sector has taken a knock over the last year, as Prezzo shut down the majority of its restaurants last year.
The restaurant group closed 94 outlets - about a third of the chain - resulting in around 500 job losses.
Jamie Oliver's Italian chain collapsed into administration earlier this year and the celebrity chef had to shut 22 of his 25 UK restaurants.
The closure resulted in 1,000 job losses and Oliver said he was “deeply saddened” by the outcome.