Italian restaurant chain Prezzo is to close 94 restaurants, reportedly costing around 500 jobs in the British hospitality sector.
Prezzo, bought by TPG in 2014 for just over £300m, secured the backing of almost 88 per cent of its creditors for Company Voluntary Arrangement (CVA) on 17 March. This will allow the chain to exit unprofitable branches and secure rent reductions, according to The Guardian. The restaurant chain worked with AlixPartners on the restructuring.
Altogether, Prezzo employs 4,500 staff, but the company said every effort will be made to redeploy those team members affected by the closures. A total of 33 outlets of Prezzo’s TexMex chain Chimichanga will be closed in the cuts.
Under the rescue plan, rents will decrease by between 25% and 50% at 57 sites.
Prezzo said the 94 restaurants are likely to close in April and May, and staff will be made aware of the exact dates as soon as they are confirmed.
A report by Begbies Traynor highlighted the struggle the hospitality industry is currently facing, with burger chain Byron and Jamie’s Italian also undertaking CVAs. The data showed the number of restaurants experiencing significant financial problems was 11,091 in March, up 8 per cent on a year earlier.
Jon Hendry-Pickup, chief executive of Prezzo, said: “While we continue to be profitable, the pressures on our industry have been well documented. Despite this being a tough decision, the support given today by our creditors shows that they believe we have the right approach to transforming Prezzo in the eyes of teams, customers and stakeholders.”
Rival Italian restaurant chain Carluccio’s is also undergoing a period of change as it seeks a private equity buyer after a sharp drop in profits.