Creditors and landlords at Pizza Hut, are due to close the vote on the chain’s company voluntary arrangement (CVA) restructuring plan on Monday.
The UK arm of the pizza chain will be the latest franchise to attempt to push through restaurant closures, with the deal also securing the company major rent cuts on its remaining sites.
If passed, the deal will result in the permanent closure of 29 of Pizza Hut UK’s 244 restaurants, putting around 450 jobs at risk, adding the chain to a long list of UK restaurant casualties.
Earlier this month, the Pizza Huts Restaurant Group, which runs the dine-in Pizza Hut franchise in the UK said COVID-19 had caused “significant disruption.”
Sales are not expected to “fully bounce back” until next year despite it re-opening branches.
The CVA, aims to protect around 5,000 jobs across its remaining restaurants as well as the “longevity” of the business, the company said.
Previously, landlords in the hospitality and retail sectors have come under pressure following a raft of high profile CVAs while some businesses also held off quarterly rent payments. Landlords and creditors often vote in favour of a CVA, an insolvency procedure, to avoid putting their companies in full administration and re-negotiate debt repayments.
Earlier this month, Pizza Express announced that creditors had approved restructuring plans that will close 73 of its restaurants and put as many as 1,100 jobs at risk in the UK.
Earlier in September, a Pizza Hut spokeswoman said: “We are committed to doing the right thing and, in order to secure as many jobs as possible and continue serving our communities, we are working to reach an agreement with our creditors.
“We understand this is a difficult time for everyone involved.
“We appreciate the support of our business partners and are doing everything we can to help our team members during this process, including speaking with those affected by the consultation.”
Britain’s hospitality sector has been one of the industries worst hit by the virus, with 80% of firms halting trading and 1.4 million workers being furloughed in April.
According to the Centre for Retail Research, which tracks the impact of CVAs, over 3,500 shops have already been closed this year, and many more are expected to be shut as the government starts to withdraw economic support. In 2019 alone, 313 shops were closed using CVAs, costing over 26,000 jobs. Its found CVA usage increased by 30% between 2015 and 2019.
Well-known names that have used CVAs in the past include New Look and Mothercare (MTC.L), while the likes of AllSaints, Travelodge, and Wagamama-owner The Restaurant Group (RTN.L) have all used CVAs so far this year.