Pizza Express going tits-up is both easy and hard to believe. Easy, because whenever I go there I resolve to never go there again (and I only end up going back when it’s not my decision).
The reason why is that the pizzas are overpriced. They’re decent enough quality, obviously miles better than Pizza Hut and Dominos (which are incredibly bad value), but they’re not really worth the money they charge. For the same money, or a bit more, you could get a much better, and more filling, meal at a decent restaurant. Or you could save money and go to a Nandos. For a third of the money you could get fantastic pizza at a little local place near where I used to live.
There’s a lot more choice out there now, and the internet makes it easier to find about places, so why spend good money on pizzas that are never quite satisfying enough?
But it’s also hard to believe, because Pizza Express’s always seem to be full whenever you go into one, or walk past one, and with the prices they charge it’s hard to see how they could lose money. So how could they be in such desperate straits? Especially a company that has been a success for decades. By now, you’d think, they should own all their buildings, all their ovens and tables and chairs, etc., so even when times are tough they should be able to weather it because their overheads (like the wages bill, and the electricity and gas bills) will be low.
But, of course, it turns out that the problem is our old friend debt. The smart original owners cashed in when the going was good, and sold to someone else. Since then it’s been the same old story, with the firm being passed around by multinational investment companies, and the soul goes out of the business. Eventually a sucker buys it by loading up on debt, and that’s what seems to have happened here, with a Chinese mega-sucker group purchasing it in 2014. For £900 million. Yes, £900 million for a restaurant chain that anyone could see is in its twilight years, and which faces a ‘challenging’ market.
It does seem to have been a purchase enabled by debt, because the Telegraph is reporting that the interest bill alone is £100 million a year. Add in the capital repayment and you’re looking at scary figures for an owner. You just can’t weather storms for long when you have enormous amounts to pay back every month. I’m hardly a business guru but it just seems like common sense that you don’t get into massive debt over a business unless that business is clearly going to pump out money like it’s the Royal Mint for years. And the restaurant business is famously a fickle one, and there are too many mid-price chains currently competing against each other.
(It was the same with ToysRUs. They might have been able to keep going for years had they not been ladened with massive debts to service because their current owners paid way too much for it.)
Pizza Express is not dying now. Pizza Express started dying when the original owners cashed in (not that I blame them). And why exactly would anyone want to support Pizza Express now when it’s owned by Chinese capital investors? To be fair, Pizza Express is always a safe bet, and it’s never bad, but it’s stopped being something funky and good value. It’s now just another one of those bland indentikit soulless plastic chains blighting the high streets of Britain.
Update: Perhaps that last sentence is a little harsh.