In the latest catastrophe to hit UK high streets, much-loved pizza-chain Pizza Hut’s future looks to be in jeopardy, as auditors warn of “material uncertainty” in the future.
According to reports, the US firm’s biggest British franchise, with over 4,000 employees in more than 150 outlets, is locked in negotiations to refinance debt (understood to be in the tens of millions of pounds), due to be repaid to lenders in April.
Bosses at Pizza Hut’s UK operation are reportedly seeking revised terms on its debt, as rocketing inflation pushed the company further into debt in 2022.
Its auditors, PwC, warned in accounts published at the weekend that Pizza Hut UK faced a “material uncertainty which may cast significant doubt about the….ability to continue as a going concern,” reported The Sunday Times.
Does Pizza Hut need a touch of the Michelin Star class?
Last month, celebrity Michelin Star chef Marcus Wareing shocked the nation by endorsing Pizza Express, describing it as “the best pizza in London,” and revealing he has eaten at the chain for the past 20 years. His favourite dish? American Hot on a Romana base with extra chilli…
Sadly, Pizza Hut has had no such endorsement in recent months, as it struggles to recover from the pandemic and soaring prices.
The rise and fall of Pizza Hut
Pizza Hut has brought us some iconic pizza firsts over the years, including the 1980’s aptly named Pizza Pan, pizza cooked in a pan, the infamous cheesy Stuffed Crust in the mid-90’s and The Edge in the early noughties, a thin pizza with topping all around the edge.
By the late eighties, Pizza Hut was flying, opening an average of one restaurant a week in the UK.
But as competition entered into the market, in the form of Domino’s and Papa Johns, amongst others, it was no longer the crowning glory it maybe once was.
In today’s market, the tough economic climate continues to impact businesses, with many having not fully recovered from the pandemic when faced with soaring energy prices and higher operating costs, following mounting pressures on global supply chains as a result of the War in Ukraine.
In turn, interest rates rocketed and debt was no longer cheap, as lenders clawed back money or refinanced debt on less favourable terms.
Last week, a rescue deal for beleaguered high street DIY retailer Wilko collapsed, as administrators struggled to find a buyer for the business, and it was due to begin the painful task of closing down 400 stores and laying off 12,000 workers this week.
But news has just broken that plans for redundancies and store closures have been put on hold as administrators from PwC consider two potential last-minute ditch rescues that emerged over the bank holiday weekend.
It is understood that Doug Putman, the owner of HMV in the UK, has increased his bid and another potential offer has emerged from M2, a restructuring specialist. We’ll keep you posted…
Matt Haycox: on paying back your debts
In Matt’s recent newsletter, he talked of debt refinancing and repayment from the point of view of a lender, having sat on both sides of the fences in his 20+ year career.
His advice if you owe money and can’t repay it? Humility, communication and transparency.
He says: “When money is involved – and specifically when it is owed, and can’t be repaid – you get to see so many different sides of people. So many lies, so many excuses and so many strange behaviours. People who are scared. People who are aggressive. People trying to unwind or hide things. People digging themselves a deeper hole.
“But for all the strange behaviours, for all the different characteristics I see, there is always one that is missing. And I believe it is actually the only one that matters when it comes to trying to build a bridge with a lender and make a bad situation better…humility,” he adds.
Humility
Matt says: “When you owe someone money and have defaulted on a loan – you are in the wrong. It’s that simple! It doesn’t matter what the circumstances are.
“Someone may have let you down further along the chain and it has had a knock-on effect. The world may have come to a halt with Covid. A recession may be kicking in. I get it, none of it is nice and it all has an effect on your ability to perform. But you still owe the money! You have signed a contract to perform in a certain way, by a certain date – and you haven’t done it.”
Clear communication & transparency
“Almost as many times as I have been a lender, I have also been a borrower,” Matt says. “And it hasn’t always gone to plan for me either. The only way I have been able to solve problems, get favourable outcomes and maintain relationships with people is by acknowledging my faults, acting with humility, and working with that lender to put their needs ahead of my own.
“By doing so, I have been able to do future deals with people, even when things have gone wrong in the past,” he adds.
For all the latest news, business advice and strategy, sign-up to the Matt Haycox newsletter (below), which hits your in-box every Friday morning.
