Prezzo returns to profitability following restructure

18-Mar-2024 - Last updated on 18-Mar-2024 at 15:31 GMT

Prezzo has returned to profitability following a restructure of its business that saw it close nearly a third of its estate last year.

The Italian casual dining group reports that the restructure, which saw the groupshutter 46 loss-making sites across the country following a strategic review of the business, combined with the easing of labour issues, stabilising inflation, the recruitment of a new executive team and locked-in deflationary benefits in utilities means ‘the outlook for Prezzo is positive’.

It comes after Prezzo saw its losses widen in the year to 1 January 2023.

In its latest financial results, the group saw revenue rise to £135m, up from £95m the year before.

Increases in menu prices combined with a focus on efficiency and the save to invest focus of the business pushed its gross profit margin up from 31.2% to 35%.

However, challenges within the macro-environment and the consequential change to the financial model of restaurants resulted in an adjusted EBITDA loss of £4.8m (2021: adjusted EBITDA profit of £4.6m).

Overall, Prezzo reported a £30.1m loss after tax for the period, up from a loss of £22.4m the previous year.

At the time of the restructuring in April last year, the group said soaring inflation had made it impossible to keep all its restaurants operating profitably and warned creditors that it would ‘likely enter into administration’ should the closures not be implemented.

Founded in 2000 by restaurateur Jonathan Kaye, Prezzo once operated an estate of around 300 sites, but now has only 97.

Back in January, Prezzo chief executive Dean Challenger told The Telegraph that the group, which is backed by Cain International, could expand to around 120 restaurants again.

However, he said the business would never return to its peak size as high costs and soaring taxes meant casual dining chains no longer work in some parts of the country, such as small towns and more rural locations.

Challenger also revealed that the group is in the ‘early stages’ of planning a new QSR brand called Prezzo Pronto, which will take the form of a takeaway pasta concept that will have branches in UK train stations.

“Train stations have options like Upper Crust, KFC, Burger King, but there’s nothing available at a slight level above these. I think there’s a gap there,” he told The Telegraph.

The menu will take cues from the US grab-and-go market and feature takeaway pasta dishes and pizza served by the slice.

“We’ve got a model that works because pasta and pizza are relatively quick.”