Pizza Hut future in UK and 150 stores 'uncertain' as it battles £73million debt

29 August 2023 , 09:36

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Pizza Hut's future has been classed as "materially uncertain" by its auditors PwC (Image: Getty Images)

The future of Pizza Hut in the UK is said to be "uncertain" as it battles with huge debt.

The UK branch for the restaurant chain, called Heart with Smart Group, is currently in talks to refinance almost £31million of its overall £73million debt pile which must be repaid by next April. It comes as the company managed to secure relaxed terms on its loan.

The concerns over its future come as its latest accounts warned that there was a chance it could breach these loan agreements in a “severe but plausible downside scenario”, according to The Telegraph. Auditors PwC warned it faces “material uncertainty which may cast significant doubt about the…ability to continue as a going concern".

In its most recent accounts for the year to December 2022, Pizza Hut bounced back with a revenue of £161million, from £130million the year before. However, due to rising costs, Pizza Hut actually operated at a loss of over £3million.

In its accounts, Pizza Hut said just as the coronavirus issues had started to ease, the war in Ukraine had caused "unprecedented and sustained inflation of energy, food and transportation costs”. It claimed it had also been hit by a shortage of workers who themselves faced the pressures of rising costs. The pizza chain said both of these elements had led to staff asking for pay rises.

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Even with these pressures, however, Pizza Hut said it remained optimistic as the demand for the "restaurant experience" remained strong. In a statement issued after the results, Jens Hofma, chief executive of Heart With Smart Group, which runs the Pizza Hut UK dining franchise, said restaurant profit margins are back to pre-Covid levels.

He said: “We are currently trading well ahead of 2019 on a like for like store basis, our restaurant profit margins are sound and in line with pre-Covid. We also experienced an excellent summer trading period with double digit growth, driven by the weather and our family value meals, as well as our buffet, which offers an affordable way for consumers to enjoy a dining out treat.”

Pizza Hut has faced stiff competition from a host of other fast food outlets in recent years, including Domino's and Papa John's. In 2020, the chain announced that it would close nearly 30 branches in a bid to save the business from collapse. At the time, the business ran over 200 locations and employed around 5,000 staff. As of now, Pizza Hut operates around 152 outlets in the UK and employs around 4,000 staff.

Ruby Flanagan