In this ferocious attack of the epidemic crisis, another catering giant spread the news of change! This time, it is Pizza Express, an old British pizza chain held by Chinese investors, which currently operates 60 “pizza Marzano” restaurants in China.
Recently, according to the financial times, Reuters, BBC and other foreign media reports, Pizza Express announced on August 4 that as part of the restructuring agreement to help reduce debt and inject capital, it will sell its UK business, close 67 restaurants in the UK (15% of UK stores), and may lay off 1100 employees.
The company said it was taking greater action to “avoid bankruptcy” because of the deepening impact of the new outbreak on leisure catering.
Financial Times news
Hony retains China business
So, in this reorganization, what will happen to the business of Pizza Express in China? Mr. xiaoshidai noted that “pisamachano” would be retained by Hony investment, the Chinese capital currently holding Pizza Express.
According to foreign media reports, the 55 year old Italian pizza chain will spin off its China business as part of a comprehensive restructuring agreement with Hony capital, the Chinese private equity firm that owns the company.
According to data, in 2014, Hony investment, an investment institution affiliated to Lenovo, invested nearly 10 billion yuan to acquire pizzaexpress. According to media reports, the deal was the biggest acquisition of a European restaurant that year.
“Hony has agreed to take over the company’s business in China, while the business and brand of Pizza Express in the UK and other markets will be controlled by its senior secured creditors until a buyer is found.” The deal is expected to close in the autumn, the Financial Times reported on Tuesday.
This also means that Hony’s Pizza Express business will shrink to “Pisa masano” in the Chinese market.
Maybe many people don’t know that Hony is actually the “invisible giant” in China’s catering industry. According to the information read by snack agents, Hony investment also has a catering investment and management platform, Baifu holding (01488. HK). Hongyi and Baifu have successively invested in or acquired 14 catering brands, including Pisa masano, Xi Shaoye rougamo, meimian, lecherous salad, seesaw coffee, etc., which are said to have more than 1300 stores in the world.
60 pizzas in China
At present, in terms of the number of restaurants, China is the world’s second largest market for the pizza chain, after the UK, its “headquarters”.
According to BBC reports, Pizza Express has more than 600 restaurants around the world in 2020. Among them, there are 454 (including 5 franchised stores) in the UK, 60 in mainland China, 24 in Hong Kong, 19 in Ireland, 14 in UAE, 6 in Singapore, and 49 restaurants operated by franchisees in other international markets.
In today’s search, pisamachano has not yet published information on the official website, official wechat, official microblog and other platforms. On the official wechat app, the snack agent randomly selected several stores in Guangzhou and Shanghai, which are all in normal business.
Speaking of it, this British pizza chain has a long history in the Chinese market. Before being acquired by Chinese capital in 2014, Pizza Express began to test the Chinese market. However, according to previous media reports, due to “acclimatization”, Pizza Express did not stir up too much splash in the Chinese market.
According to the official website of snack agents, Pizza Express was founded in London in 1965 and is a chain restaurant focusing on selling “authentic Italian pizza”. In 2001, Pizza Express entered the Hong Kong market of China through franchise. In 2006, its first restaurant in mainland China opened in Shanghai and was named Marzano.
In 2014, that is, the year when Hony acquired this brand, the company’s 500th restaurant in the world opened in taiguli, Beijing. In the same year, Guangdong’s first store opened in Shenzhen. At present, the brand also has restaurants in Guangzhou, Wuhan, Chengdu, Nanjing, Xiamen and other cities.
After acquiring the overseas pizza chain, Hony capital has done a lot of “localization” work.
First of all, the brand was renamed as pizza Marzano to get rid of the original impression of fast food and build it into a medium and high-end brand. Secondly, considering that the product is not well-known in China, in order to formulate its China strategy, it also invited Wang Jinlong, who was the chairman of Starbucks Greater China and President of Asia Pacific region, to join in in 2015. He served as interim CEO of Pizza Express in China from April 2016 to may 2017. According to the official website, Wang Jinlong is the chairman and Global CEO of Pizza Express.
Looking at the global official website of Pizza Express, xiaoshidai found that the company did not disclose its 2019 annual financial report this year. In its 2018 financial report released in April last year, Wang Jinlong said that with more and more competitors entering the market, “the pace of innovation of local brands has surpassed us, and the business in mainland China has been particularly affected.”.
As a result, he said at the time that the brand had adopted a “prudent expansion strategy” in the mainland market in the short term, innovated the menu and reshaped its operation and marketing strategy. Interestingly, in the aspect of food innovation, the snack generation noticed that as early as 2018, the brand cooperated with beyond meat in the Hong Kong market and tried to launch a vegetable meat pizza.
“It is important that our long-term plans in mainland China remain unchanged and we are confident in the future growth of the market.” Wang Jinlong said at that time. According to official information, Pisa masano opened a new store in Chengdu in January this year. As the epidemic improved in early April, all of its stores in Wuhan were back to work.
Dragged down by huge debts
In fact, before the outbreak of the black swan, Pizza Express was in trouble, especially in the UK, its largest market.
Of course, its problems come from many aspects, including rising costs, intensified competition, changing consumption habits, etc.; but the most serious problem is the company’s huge debt problem, which is also the core of the restructuring agreement.
Back to the latest restructuring plan.
According to the financial times, another 144 million pounds of new capital will be injected into the business under the arrangement, providing a stronger financial basis for Pizza Express. In April last year, the company disclosed a net borrowing of up to 1.1 billion pounds and an interest expense of 93.1 million pounds.
Half of the 144 million pounds will be used to refinance debt and the other half to fund the reopening of its 449 British restaurants, the report said. The 67 British restaurants identified in the restructuring to be closed are no longer open.
Pizza Express also said on Tuesday it plans to cut its debt substantially, from 735 million to 319 million pounds, and said the deal would “significantly strengthen the group and be able to fund future growth plans.”. Andy Pellington, the company’s chief financial officer, described the deal as “a complete solution to the balance sheet problem.”.
This year’s epidemic situation has undoubtedly made many catering businesses under pressure “worse”.
“The leisure and catering industry in the UK had a hard time because of the obvious oversupply and rising costs in the market. Now the epidemic has deepened the plight.” At least 15 UK catering chains have intended or announced sales since the outbreak crisis, the Financial Times said.
However, the report points out that, unlike many other chain restaurants, most of the restaurants in Pizza Express were “single store profitable” before the crisis hit, but its huge debt was a heavy burden on the company.
But it’s not easy for pizza express to find someone to “pick up”.
Since last summer, the financial restructuring has been reported. One person close to the talks said the withdrawal of 67 underperforming restaurants was not “a matter of life and death” for Pizza Express. “While this is a very important part of [the business], rent is not really the biggest problem they face.”
In order to keep the business going, any potential bidder must be able to offer more than the gbp465 million that Pizza Express owes senior secured creditors, the person added.
A source close to the company was quoted by the financial times as saying that facilitating the sale process while negotiating with the unsecured creditors helped the company to obtain a provable valuation, but the person said they did not believe that a buyer would appear.
David beadle, vice president of Moody’s Investors Service, said the cash that Pizza Express had to consume when it closed its stores “would have a negative impact on the recovery of existing lenders in the proposed restructuring.”.
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