Coronavirus: Jobs at risk as Pizza Hut puts CVA on menu

·3-min read

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.

<p>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).</p><p>Sources said that a final decision had yet to be taken by the chain but that a CVA was "a distinct possibility".</p><p>It is unclear how many sites or jobs might be at risk under any restructuring process.</p><p>Pizza Hut traded from 244 restaurants in the UK prior to the coronavirus outbreak, the vast majority of which have since reopened.</p><p>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.</p><p>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.</p><p>"Along with many other businesses, we are looking at ways to minimise that financial impact, while continuing to trade as usual.</p><p>"Whether this will require financial restructuring in the form of a CVA or otherwise is as yet undecided."</p><p>The spokesman added that Pizza Hut Restaurants employed 5,700 people in the UK.</p><p>Pizza Hut Restaurants is a separately owned entity to the brand's UK delivery arm, which trades from a further 380 outlets.</p><p>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.</p><p>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.</p><p>Most commercial property-owners are being asked to agree to turnover rent deals in order to aid their tenants' survival prospects.</p><p>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.</p><p>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.</p><p>Pizza Hut's fortunes had improved prior to the coronavirus outbreak, following a long period of under-performance.</p><p>The company's chief executive, Jens Hofma, orchestrated a management buyout in 2018, with backing from Pricoa Capital, a financial investor.</p><p>The business trades in the UK under franchise from its US-based owner.</p><p>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.</p><p>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.</p>