The operator of almost 150 Pizza Hut restaurants in the UK is in advanced talks with potential buyers as it strives to secure a deal to secure its future.
Sky News has learned that Heart With Smart (HWS), the US brand’s largest UK franchisee, aims to select a preferred bidder in January after weeks of discussions with suitors.
Sources close to the process said a number of corporate and financial buyers had expressed interest in acquiring a significant stake in the restaurant chain.
In November, Sky News revealed that HWS had begun contacting potential bidders in a bid to soften the impact of tax rises announced in the previous month’s budget.
HWS, which operates approximately 140 Pizza Hut restaurants, is working with Interpath Advisory on this process.
The business, previously called Pizza Hut Restaurants, employs around 3,000 people, making it one of the largest operators in Britain’s casual dining sector.
It is owned by both Pricoa and the company’s management, headed by Managing Director Jens Hofma.
They led a management buyout worth £100m in 2018, with the business previously owned by Rutland Partners, a private equity firm.
HWS licenses the Pizza Hut name to Yum! Brands, the American food giant which also owns KFC.
Insiders told Sky News last month that increases to the national living wage and employers’ national insurance contributions (NICs) unveiled in the Budget by Rachel Reeves, the chancellor, would add around £4m to annual costs of HWS, the equivalent of more than half of HWS’s annual costs. last year’s profit before interest, taxes and depreciation.
The structure of a buyout or capital injection was unclear Monday, although the past eight weeks have seen a series of grim warnings from the hotel sector.
Even before the budget, restaurateurs were feeling significant pressure, with TGI Fridays collapsing into administration before being sold to a consortium of Breal Capital and Calveton.
Sky News also revealed in the autumn that Pizza Express had hired investment bankers to advise it on a debt refinancing.
HWS operates all Pizza Hut restaurants in Britain, but has no stake in its many delivery outlets, which are run by individual franchisees.
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Accounts filed at Companies House for HWS4 for the period from December 5, 2022 to December 3, 2023 show that it completed a debt restructuring under which its lenders agreed to suspend repayments on some of its borrowings until in November next year.
The terms of the same facilities have also been extended until September 2027, while a new ten-year Pizza Hut franchise agreement with Yum Brands has also been signed, which expires in 2032.
“Even though market conditions have improved significantly since 2022, consumers continue to face above-average levels of inflation, high mortgage costs and slow growth in the economy,” the accounts said.
He adds: “Business costs remain challenging. »
Pizza Hut opened its first restaurant in the UK in the early 1970s and expanded rapidly over the next 15 years.
In 2020, the company announced it was closing dozens of restaurants, resulting in the loss of hundreds of jobs, through a Company Voluntary Arrangement (CVA).
At that time it operated more than 240 sites across the UK.
HWS declined to comment.