Pizza Hut is closing 68 eat-in restaurants and 11 delivery sites in the UK after the firm operating them fell into administration in the face of rising costs, lower consumer spending, and competition from delivery apps.
DC London Pie Limited, which operates the pizza brand in the UK, appointed FTI Consulting as administrators yesterday. A statement from FTI noted that DC had been impacted by challenging trading conditions, as well as cash flow pressures as a result of tax-related obligations.
However, Pizza Hut’s global owner Yum! Brands has agreed to save 64 of the 132 restaurants in the UK. Nicolas Burquier, Managing Director for Pizza Hut Europe and Canada, said: “This targeted acquisition aims to safeguard our guest experience and protect jobs where possible,” adding that the immediate priority for the business was “operational continuity at the acquired locations and supporting colleagues through the transition”.
Matt Callaghan, joint administrator from FTI, commented: “This transaction provides a stable platform for one of the UK’s best-known dine-in brands, securing the continuation of 64 Pizza Hut sites and, importantly, preserving 1,276 jobs. The joint administrators will continue to work with employees who have unfortunately been made redundant, to ensure they get the support needed.”
Pizza Hut’s UK business has been struggling for some time and had previously gone into administration less than a year ago. DC, which also owns Pizza Hut franchises in Sweden and Denmark, bought the UK restaurants from insolvency in January this year.
Speaking to the BBC, Zoe Adjay, a senior lecturer in hospitality at the University of East London, noted that Pizza Hut had been “at the forefront of bringing fast food into the UK” in the 1970s, but had struggled to remain relevant amid increased competition.
“The pizza market has become a lot more upmarket,” she said. “There’s a lot more high-end pizza, and they’ve taken a huge market share.”
Adjay added that Pizza Hut had also failed to establish itself on social media in the same way as some of its competitors.
Meanwhile, Frank Bouette, a partner at city law firm DMH Stallard and specialist in restructuring and insolvency, commented: “Operating as a dine-in and delivery model when there is fierce competition by delivery online models – with lower overheads – was always going to be a challenge.
“As the market shifted toward fast app-based delivery, delayed investment in tech and logistics has caught up with them.
“Add in varying product experience across locations; blurred market positioning; the cost of physical restaurants (which its delivery competitors didn’t have); the overhang and effect of the pandemic on dining trends; and inconsistent brand delivery resulting from varying franchises – it’s a wonder it survived this long.”
NAM Implications:
- Cause and effect are well spelt out above.
- Showing that in unprecedented times, there is little space for second best…
- …especially in hospitality.
- Hopefully, a cut-to-fit strategy will salvage some of the brand equity.
- Fingers crossed…
