[Food] Pizza Express on the brink?

[Weststander]

100% - It's uber trendy to knock a chain but there are many many worse pizzas out there in independents and chains, I like a Pizza Express and will miss them if they go...

Same here.

Love Pizza Express food, have never had any issues with service. The food is far better than the crap served at cheapskate chains such as Bella Italia, or local Donatello's etc. Always a sure bet for a good meal on our football trips around the country, or when in central London.

Will miss them.

 

[BLOCK F]

We already are.

How many people on here talk in person to each other more than they do on NSC?

True.
I wonder how us NSC folk would get on with each other in ' true life' as my children used to call it.
Very few punches on the nose and shouting and I reckon we'd be a lot nicer to each other.
No names and no packdrill, but there's even a few on here I would buy a drink, although we 'electronically shout' at each other, now and again.

 

[Audax]

Pizza is so simple, you've really got to be offering something amazing to get people into a high rent large restaurant.

So simple, that we make our own at home. Dough done in the bread maker machine (with our own mods), hand stretched onto a pizza tray, topped by hand with whatever we feel like topping with. Pizza chains simply cannot compete *except* for those occasions when we simply can't be arsed.

 

[Barham's tash]

Same here.

Love Pizza Express food, have never had any issues with service. The food is far better than the crap served at cheapskate chains such as Bella Italia, or local Donatello's etc. Always a sure bet for a good meal on our football trips around the country, or when in central London.

Will miss them.

Um at least Donatello’s is actually pizza in the traditional sense - hand stretched and lovingly topped with rustic flavoursome ingredients -rather than homogenous frozen crap that PE serves.

 

[Weststander]

Nothing to do with pizza, everything to do with asset stripping and management tinkering

This. There’s something odd about the UK group company’s audited accounts. The group always makes operating profits:
2018 - £38m
2017 - £61m
Total income and income per restaurant always holds up, with cash inflow from operating activities £83m in 2018.

Yet they have £1.1b of debt. They are charged £112m interest on that debt, at 10% from connected companies. They’re owned by a BVI company, in turn by a Private Equity Fund.

The underlying reason - On 18 August 2014 new owners bought the business with a 100% leveraged buyout, loading £0.9b on new debt on the business, with 10% interest accruing, hey presto £1.1b of debt on a successful business.

Madness, why are the new owners trying to destroy their investment?

 

[blue-shifted]

Just read through this thread and I have a pledge to make to you all.

No more chain restaurants. Private Equity finds? Jeez

There are loads of decent family run independents in Brighton. Maybe they even pay a bit of tax.

 

[zefarelly]

I alWays try and find something independent, can be a minor risk if in a big/family group or you have fusspots etc, the other trouble is, even when you think you do, sometime it turns out to be a cleverly styled chain. Maybe a small one but soon enough they get bought etc etc.

I'm guessing, but the 'value' in most acquisitions must largely be based around property.

My business is worth 17.4% of **** all with an empty order book, maybe a few grand in a trademark, some odds n sods, ten in equipment, but the real dosh is in the workshops. . .

 

[birthofanorange]

Doing my best to support my local Italian, Piero's, rather than a chain.

Surely not the one in Spring Street? Is that really still going?

 

[clapham_gull]

A huge Marks and Spencer food only store has opened in Clapham Junction, Waitrose opposite will suffer.

Anyway - they are making fresh pizzas in there to take home.

 

[Fungus]

Surely not the one in Spring Street? Is that really still going?

My local = Kenwyn Street, Truro!

 

[Hampster Gull]

Private equity owned. Simple model, but, load up with debt to offset part of all of the purchase, pay high dividends that rightly regard you regardless of,performance, then hope the gravy train keeps going, shrug shoulders if not

 

[Lower West Stander]

This. There’s something odd about the UK group company’s audited accounts. The group always makes operating profits:
2018 - £38m
2017 - £61m
Total income and income per restaurant always holds up, with cash inflow from operating activities £83m in 2018.

Yet they have £1.1b of debt. They are charged £112m interest on that debt, at 10% from connected companies. They’re owned by a BVI company, in turn by a Private Equity Fund.

The underlying reason - On 18 August 2014 new owners bought the business with a 100% leveraged buyout, loading £0.9b on new debt on the business, with 10% interest accruing, hey presto £1.1b of debt on a successful business.

Madness, why are the new owners trying to destroy their investment?

Because debt is very cheap. Although that shareholder loan is expensive, it’s quasi equity. The senior debt in the structure is a lot lower than that.

Chuck in some over optimistic financial modelling based on top line growth and aggressive cost cutting and syndicate to debt investors.

Bang. You’re done.


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[jessiejames]

Surely not the one in Spring Street? Is that really still going?

No that closed 3 years ago. Piero retired.

 

[yxee]

The voucher model was a PITA, forced us to spend time filling out personal details on phone while ordering. Pizzas were not very consistent quality. Seemed like the main customers were kids birthday parties.

Everyone complains about death of the high street but people aren't going to pay for something they don't value.

 

[Weststander]

Because debt is very cheap. Although that shareholder loan is expensive, it’s quasi equity. The senior debt in the structure is a lot lower than that.

Chuck in some over optimistic financial modelling based on top line growth and aggressive cost cutting and syndicate to debt investors.

Bang. You’re done.


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It’s quasi equity, I do understand that.

So with the bulk of the debt from that related party and half their interest payABLE paper accrued interest to that party, why is the business with decent underlying profits, clear positive cashflow, turnover in totality and per restaurant NOT in decline .... on the brink, according to today’s gossip relayed through NSC?

There are no material assets to strip as such. The restaurant sites are not owned freehold or very long leasehold, instead rented under leases with unconnected landlords.

Reading further in the quality press rather than the tabloid/NSC gossip, it appears that this is a restructure of the debt. The decent operating profits cannot cover the ridiculous contrived interest accrued each year.

I wonder if they’ll also use this to negotiate huge reductions in rent with landlords?

 

[Weststander]

Private equity owned. Simple model, but, load up with debt to offset part of all of the purchase, pay high dividends that rightly regard you regardless of,performance, then hope the gravy train keeps going, shrug shoulders if not

 

[The Clamp]

I had too many snowball dough balls last time I visited PE.

Makes me feel ill thinking about it.

That butterscotch dipping sauce though.....

 

[Iggle Piggle]

For families with young kids, Pizza express is a good value option. It has a decent kids meal and caters for them with colouring etc very well. I'll miss it if it goes.

On a seperate note is Deliveroo really that popular? My local Chinese still only accepts cash, let alone has online ordering and a moped outside. We have the occasional Chinese or Indian in but if I 'Can't be bothered to cook' we will go out. Getting out the house is part of the fun. Is that in the minority now?

 

[Lower West Stander]

It’s quasi equity, I do understand that.

So with the bulk of the debt from that related party and half their interest payABLE paper accrued interest to that party, why is the business with decent underlying profits, clear positive cashflow, turnover in totality and per restaurant NOT in decline .... on the brink, according to today’s gossip relayed through NSC?

There are no material assets to strip as such. The restaurant sites are not owned freehold or very long leasehold, instead rented under leases with unconnected landlords.

Reading further in the quality press rather than the tabloid/NSC gossip, it appears that this is a restructure of the debt. The decent operating profits cannot cover the ridiculous contrived interest accrued each year.

I wonder if they’ll also use this to negotiate huge reductions in rent with landlords?

I haven’t looked to see if it’s actually generating free cash, but given where bonds are trading, I would guess not.

You’d have to be a pretty awful company to report an operating loss so pretty much all businesses generate some amount of cash. It’s the cash costs below the operating line that causes the problems. This can be capex, interest, leases, tax, working capital etc. Here these are so big,the company can’t pay down debt and it’s liquidity is coming under pressure. The only reason a business ever goes bust is because it runs out of cash.

So yes, this will be a debt/equity swap but that doesn’t do anything for the onerous lease payments. My guess is they will try and reduce the heavy fixed cost base by closing some shops down.


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[Lower West Stander]

It’s quasi equity, I do understand that.

So with the bulk of the debt from that related party and half their interest payABLE paper accrued interest to that party, why is the business with decent underlying profits, clear positive cashflow, turnover in totality and per restaurant NOT in decline .... on the brink, according to today’s gossip relayed through NSC?

There are no material assets to strip as such. The restaurant sites are not owned freehold or very long leasehold, instead rented under leases with unconnected landlords.

Reading further in the quality press rather than the tabloid/NSC gossip, it appears that this is a restructure of the debt. The decent operating profits cannot cover the ridiculous contrived interest accrued each year.

I wonder if they’ll also use this to negotiate huge reductions in rent with landlords?

It depends on where you draw the line regarding positive cash flow. I haven’t looked to see if it’s actually generating free cash, but given where bonds are trading, I would guess not.

You’d have to be a pretty awful company to report an operating loss so pretty much all businesses generate some amount of cash. It’s the cash costs below the operating line that causes the problems. This can be capex, interest, leases, tax, working capital etc. Here these are so big,the company can’t pay down debt and it’s liquidity is coming under pressure. The only reason a business ever goes bust is because it runs out of cash.

So yes, this will be a debt/equity swap but that doesn’t do anything for the onerous lease payments. My guess is they will try and reduce the heavy fixed cost base by closing some shops down.


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