Pizza Hut has become the latest restaurant chain in the UK to announce a spate of closures, as the firm prepares to file a company voluntary agreement (CVA) and initiate a major restructuring scheme.
The pizza chain – owned by American fast food tycoon YUM! Brands, Inc (NYSE:YUM) – has struggled to pay off its debts due to the “significant disruption” of the coronavirus pandemic, which left the restaurant industry essentially paralysed during lockdown.
Although Pizza Hut had reportedly performed better than usual before the pandemic took hold in March, the company has admitted that its sales are not expected to fully recover until “well into 2021”.
The CVA is to be handled by New York-based consultancy firm Alvarez & Marshall, and could go ahead as soon as Wednesday evening.
Along with 29 restaurant closures across the UK, as many as 450 jobs are set to be lost amid a major restructuring which will see the chain renegotiate rent with landlords to a less demanding “turnover” model – meaning rent would be paid based on the revenue of each individual site.
A spokeswoman for Pizza Hut commented on the news, stating:
“We are committed to doing the right thing, and in order to secure as many jobs as possible and continue serving our communities, we are working to reach an agreement with our creditors.
“While we are likely to see 29 Hut closures and 450 job losses, any measures we take aim to protect about 5,000 jobs at our remaining 215 restaurants, as well as the longevity of the business.
“We understand this is a difficult time for everyone involved.
“We appreciate the support of our business partners and are doing everything we can to help our team members during this process, including speaking with those affected by the consultation”.
Pizza Hut delivery services are not expected to be affected by the move, as these are handled by a separate firm – Pizza Hut UK – which oversees food delivery across an additional 380 sites nationwide.