A leading UK-based operator of approximately 150 Pizza Hut restaurants is currently in advanced discussions with potential buyers in a race to finalize a deal ensuring its future.
Sources have informed Sky News that Heart With Smart (HWS), the largest franchisee of the US-owned brand in the UK, aims to select a preferred bidder in January following weeks of negotiations with interested parties.
Insiders familiar with the process have revealed that various trade and financial buyers have shown interest in acquiring a substantial stake in the dine-in chain. HWS initiated discussions with potential bidders in November to offset the impact of tax increases announced in the prior month’s Budget.
Interpath Advisory is assisting HWS, which operates around 140 Pizza Hut restaurants and employs approximately 3,000 individuals, making it a significant player in the casual dining sector in the UK.
Pricoa and the company’s management, led by CEO Jens Hofma, previously acquired HWS through a management buyout reportedly valued at £100m in 2018. The business was formerly under the ownership of private equity firm Rutland Partners.
HWS holds the Pizza Hut brand license from Yum! Brands, the American food conglomerate that also owns KFC.
Recent increases in the national living wage and employers’ national insurance contributions were expected to add around £4m to HWS’s annual costs, more than half of last year’s earnings before interest, tax, depreciation, and amortization (EBITDA).
The specifics of a potential takeover or capital injection remain unclear, amid challenging market conditions and downward trends in the hospitality industry.
HWS is solely responsible for Pizza Hut’s dine-in restaurants in the UK and is not connected with its numerous delivery outlets operated by separate franchisees.
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Company filings state that HWS4 completed a debt restructuring, suspending repayments until November of next year and extending the terms of existing facilities to September 2027. Additionally, a new 10-year Pizza Hut franchise agreement with Yum Brands was signed, set to expire in 2032.
The accounts highlight ongoing consumer challenges due to inflation, high mortgage costs, and slow economic growth, stating that business costs continue to be demanding.
Since its establishment in the early 1970s, Pizza Hut has expanded rapidly and faced closures in 2020 that resulted in significant job losses through a company voluntary arrangement (CVA).
Despite operating more than 240 sites across the UK at one point, Pizza Hut’s recent actions reflect the changing landscape of the dining industry.
HWS has chosen not to provide a comment at this time.