Pizza Hut Faces Administration Threatening 75 Locations and Hundreds of Jobs

Pizza Hut’s UK operations are facing significant challenges following the announcement that 68 dine-in locations are at risk of closure, threatening the jobs of approximately 1,723 employees. This development comes as DC London Pie Limited, the franchisee operating these restaurants, appointed FTI Consulting as administrators.

Administration and Job Losses

On Monday, the dire situation escalated when FTI Consulting was named as the administrator. While Pizza Hut’s global parent company, Yum! Brands, intervened to save 64 branches through a pre-pack administration deal, the remaining 68 restaurants are not included. This decision leaves a large number of staff uncertain about their future.

Background of Pizza Hut’s UK Operations

The Pizza Hut brand entered the UK market in 1973, expanding rapidly to become a well-known dining choice. At its peak, the chain boasted over 260 restaurants, employed approximately 10,000 people, and attracted about three million customers monthly. Over the years, Pizza Hut introduced notable menu items, enhancing its reputation in the competitive dining sector.

Financial Struggles and Recent Developments

Pitfalls during the coronavirus pandemic severely affected the restaurant industry. Pizza Hut secured a Company Voluntary Arrangement (CVA) to address financial distress, resulting in the closure of 29 locations to reduce overhead costs. The ongoing financial strain led to an £40 million debt owed to investor Pricoa Capital and a recent winding-up petition filed by HMRC against DC London Pie Limited.

Administration Process Explained

• When a company goes into administration, control shifts to an appointed administrator.
• The administrator aims to recover debts by leveraging company assets.
• A moratorium is placed to halt legal actions against the company.

Within eight weeks, the administrator is required to detail plans for future business operations. They will communicate these plans to creditors, employees, and Companies House.

Impact on Employees

The imminent closure of the 68 restaurants could leave hundreds without jobs. Employees are entitled to statutory redundancy pay, which depends on their age, length of service, and weekly pay. Calculations can be determined using a government calculator available online.

Broader Context of the Hospitality Sector

The hospitality sector continues to grapple with challenges such as high energy costs and inflation. Other brands, including Byron Burger and TGI Fridays, have also faced similar fates in recent years, closing multiple locations while attempting to navigate through economic difficulties.

Pizza Hut’s current predicament underscores the ongoing struggles in the dining industry as it attempts to adapt to evolving market conditions.