Sky News reports that Heart with Smart (HwS), the operator of Pizza Hut Restaurants in the UK, is aiming to select a preferred bidder in January, having brought in advisers to find new investors or a buyer for the group in November.
Sources close to the process told Sky News that a range of trade and financial buyers had expressed interest in acquiring a large stake in the dine-in chain.
It comes after auditors warned of ‘uncertainty’ over HwS’s future back in August last year, despite the group turning around a £3m loss in 2022 to report a £1.75m operating profit in 2023.
The group confirmed at the time that it had completed a significant restructuring of its debt and equity, which it said would provide a ‘strong foundation for future growth’.
It added that it is not forecasting to breach its covenant levels other than in a ‘severe but plausible’ downside scenario in which in guest demand declined sharply in the summer of 2024 before stabilising in October.
As a result of this, PwC noted in its auditor’s report that this ‘indicates the existence of a material uncertainty which may cast significant doubt about the company’s ability to continue as a going concern’.
Insiders previously told Sky News that the increases to the National Living Wage and National Insurance contributions (NICs) for employers unveiled by Chancellor Rachel Reeves in her Autumn Budget would add approximately £4m to HwS’s annual costs.
One added that the Pizza Hut Restaurants' operation needed additional funding to mitigate the impact of the Budget and put the business on a sustainable financial footing.
HwS declined to comment.
Pizza Hut Restaurants is the dine in arm of Pizza Hut in the UK and is an entirely separate entity to Pizza Hut Delivery, which is owned by Yum! Brands.
According to its website there are currently 140 Pizza Hut Restaurants in the UK.
