Prezzo set to close 100 restaurants in rescue attempt

Prezzo set to close 100 restaurants in rescue attempt

Italian restaurant chain Prezzo is preparing to close about a third of its outlets in an attempt to rescue the business, the BBC understands.

The chain, which is owned by private equity firm TPG Capital, employs about 4,500 people.

Prezzo is also expected to completely close its TexMex chain Chimichanga, which has 33 restaurants in the UK.

The move to close 100 of its 300 stores would form part of a deal to cut rent costs in the future.

Specialist restructuring firm AlixPartners is understood to be drafting a company voluntary arrangement (CVA) – a step short of going into administration – on the company’s behalf.

The CVA aims to make Prezzo viable and allow the company to continue trading.

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The situation means that hundreds of jobs are under threat, but the firm may redeploy some staff.

Prezzo was bought by TPG in 2014 for just over £300m.

It is the latest of a string of High Street firms to run into difficulties. The UK arm of toy retailer Toys R Us and electronics chain Maplin both collapsed into administration this week.

Burger chain Byron and Jamie’s Italian have both had to undergo similar restructurings this year, agreeing rescue plans with their lenders and landlords, and closing restaurants.

Barbecoa, a smaller chain also owned by Jamie Oliver, went into administration earlier this month.

Analysts have said fears over the strength of the UK economy have meant consumers have cut back on discretionary spending.

Last year, consumer spending fell for the first time since 2012, according to payments processor Visa.

Wages have also been rising at a slower pace than inflation, leaving consumers worse off.

The restaurant sector has also faced higher costs for the ingredients it buys overseas due to the drop in the pound since the UK voted to leave the European Union.

Source: BBC News

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