Prezzo debts and falling sales laid bare in CVA documents
The group entered in to a Company Voluntary Agreement (CVA) last week, which could see almost a third of its 302 restaurants shut.
Like-for-like sales at Prezzo fell 8.1% for the twelve months to December 2017 while revenue dropped 3.3% over the same period.
The CVA documents also reveal that Prezzo owes banks and suppliers almost £220m. This includes £154m to secured creditors such as RBS and Barclays Bank, while numerous unsecured creditors are owed £65.7m.
Debts include nearly £600,000 to British Gas, £67,757 to Lockhart Catering Equipment and £84,350 to discount code site Voucher Cloud.
Prezzo said rising costs and competition from high street rivals led to an "increasing sales decline" rendering some of its sites “unsustainable”
Under the terms of the CVA it is seeking to move to monthly rent payments, with proposed rent reductions of up to 50% at some sites.
“The casual dining trading environment in the UK is challenging due to a combination of factors, including a deterioration in the consumer environment," the CVA document said.
“The Group’s core brand, Prezzo, has competition from other brand names such Pizza Express, Franco Manca, ASK Italian, Zizzi and Bella Italia.
"These factors have had a significant adverse impact on Prezzo’s trading performance and financial position."
Turnaround plan
The company directors have developed a “Transformation Plan” which has seen top performing restaurants rebranded with an improved layout. Though it is in its early stages Prezzo said it has seen “significant improvements” in cover growth, staff turnover and customer satisfaction.
Prezzo also delivered £10m savings last year following a cost-cutting initiative.
Despite the changes the group expects like-for-like performance of its core estate to remain “broadly flat” in FY18, rising 5% by FY20.
Creditors will vote on the CVA at a meeting on 23 March, and if passed closures are expected to begin in April.
The company said if the plan is not approved or implemented it is likely it will fall in to administration or liquidation.
