HMRC had reportedly filing a winding-up petition against the business. The company’s international owner Yum! Brands is believed to have saved 64 of the at-risk restaurants, and 1,277 team members are believed to be transferring to the Yum! business.
But 68 locations remain at risk. The owner of the restaurants, DC London Pie Ltd, has appointed FTI Consulting as administrators.
What about Pizza Hut takeaway?
Pizza Hut Takeaway branches are unaffected as they are part of a separate business.
Pizza Hut said in a statement this morning: “Today, we announce the acquisition of the Pizza Hut dine-in operations through a pre-packaged administration, after FTI was announced today as administrators of DC London Pie Limited, a franchisee of Pizza Hut dine-in restaurants.
“We are pleased to secure the continuation of 64 sites to safeguard our guest experience and protect the associated jobs. Approximately 2,259 team members will transfer to the new Yum! equity business, including above-restaurant leaders and support teams.”
Isabelle Shepherd, Partner, at HaysMac explained some of the background to the issue: “This news highlights the continued challenges hospitality businesses face due to falling consumer demand. Budget uncertainty has prompted falls in spending, causing falling sales for many restaurant chains.
“The pizza market is particularly competitive with many new entrants taking market share, which has reduced demand for some of the more established brands who may be seen as less exciting.
“The increases in national insurance and the national living wage in April have compounded liquidity and cost issues. Hospitality businesses are suffering from the twin pressures of reduced sales and significantly increased labour costs, squeezing cashflows and working capital. Sadly, these pressures are too high for many to bear, including some beloved household names.”
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What is going into administration?
Administration is a legal process in which an administrator is appointed – this can be by the directors, a creditor or the court. They take control of the company and all its assets – which means everything it owns.
The administrator will try to save the business, and they may make any employees redundant.
If saving it fails, they will try to regain as much money as possible for creditors without immediately winding it up.
This could involve allowing the company to continue to trade for a period, while seeking to sell the business or assets, such as:
- content or websites.
- goodwill
- trademarks
- patents
- equipment
- the customer database
- software
If none of the options work, they can liquidate the company.
