Sky News confirmed this afternoon (16 January) that Heart with Smart (HwS), the operator of Pizza Hut Restaurants in the UK, has been acquired by Directional Capital, an investment firm that already controls much of Pizza Hut’s dine-in operations in Denmark and Sweden.
It comes after HwS brought in advisers from Interpath Advisory to find new investors or a buyer for the group back in November.
According to sources, only one of Pizza Hut’s 140 UK restaurants is expected to close as part of the deal.
Confirming the acquisition, HwS chief executive Jens Hofma told Sky News: “Over the past six years, we have made great progress in building our business and strengthening our operations to become one of the UK’s leading hospitality franchise operators, all whilst navigating a challenging economic backdrop.
“With the acquisition by Directional Capital announced today, the future of the business has been secured with a strong platform in place.”
In August last year, auditors warned of ‘uncertainty’ over HwS’s future 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.
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 Sky News, Directional Capital is understood to also own two of Pizza Hut’s UK delivery franchisees.
