Prezzo will close 46 restaurants that are losing money, resulting in the loss of 810 jobs. The company has been hit by rising energy and food prices.
Since being privatized in 2015, the Italian chain has gone through several restructurings. It will emerge with 97 stores and 2,000 employees.
Dean Challenger, the chief executive of Challenger Group, stated that as part of a wider strategic review, these cuts would be made to sites where, “the recovery after Covid has proven harder than we had anticipated”.
He said that the closures will impact some high-street sites, as its portfolio is shifting towards those in “better locations to cater for changing consumer habits”, such as shopping centers, retail parks and tourism destinations.
The staff were informed of the closures Monday morning as part of a consultation process. Prezzo stated that it would try to redistribute as many employees as possible within the company while also supporting others with new opportunities.
Prezzo, founded by the Kaye Family and listed on the stock exchange in 2007, was bought by TPG Private Equity (TPG) in January 2015. After the purchase, the group expanded its restaurant count from 250 to 300. However, the group’s growth ambitions suffered from increased costs and competition.
Cain International, the private equity investor of the chain, acquired it in December 2020. The following February, the chain was put through a prepack administration, which resulted in the sale of 22 restaurants. Prezzo had voluntarily closed 114 restaurants three years ago.
An analyst stated: “Prezzo is suffering death by a hundred cuts, long before the pandemic or inflation even came about.”
The restaurant group reported that costs have risen over the last year. Utility bills have more than doubled and wage inflation has reached double digits. Prezzo’s food costs increased by 40% for spaghetti, 28% for pizza sauce, and 15% for dough balls.
Challenger stated: “The past three years were some of the most difficult times that I have seen on the high street.” The cost of living crisis and the soaring inflation have made it impossible for all of our restaurants to remain profitable.