Prezzo’s Problems Highlight What is Not Being Talked About for Small Business Owners

Owner of Prezzo is exploring whether to put the Italian restaurant chain through an insolvency process amid continued uncertainty about the industry’s reopening timetable.

Cain International, who announced the purchase of the business in early December, when it trumpeted the takeover of Prezzo “as a going concern”, is in discussions with scores of landlords about future rent arrangements and the payment of arrears.

Marc Ford

Editor-in-Chief, Business Media Owner, Business Coach, Author and Keynote Speaker. Works with over 100's of small businesses every year. Trusted by BBC TV and Radio, Channel 4, Mercedes Benz, Hitachi Capital on business matters.

City sources said on Monday that Cain, which is working with advisers at FTI Consulting, was examining a number of options, depending upon the progress of talks with restaurant-owners.

These options included a pre-pack administration or a company voluntary arrangement (CVA) as well as a consensual restructuring, the insiders added. Cain, a real estate investor which owns other leisure assets such as Swingers, a chain of crazy golf sites, is expected to decide on a plan for Prezzo in the coming weeks.

A Reflection Of a Silent Minority

However you view the fortunes of yet another national chain of restaurants on the verge of collapse, it mirrors what small business owners are currently facing without the press coverage.

Prezzo is one of the UK’s largest remaining high street restaurant chains, with 180 outlets and a workforce of about 2,500 people. It was put up for sale last summer, since when it has spent barely a handful of weeks in normal trading conditions.

Whilst the Government quite rightly says it has tried to help hospitality through the conditions of the pandemic, they can’t shy away from the fact that amongst the politics of lockdowns, it’s this industry that has felt the full force of closures. For the small business owner the window of getting back on to some sort of stable financial footing is closing quickly.

‘Eat Out to Help Out’ Wasn’t The Success Some Believed

The ‘eat out to help out’ scheme, although heralded at the time as a way of getting people back into hospitality, wasn’t as successful as many main stream media commentators wanted to portray. Speaking to small business owners and landlords at the time, it was a success for boosting trade between Monday and Wednesday, however they struggled to maintain sales, and safe staffing levels on the historically busier days of Thursday, Friday, Saturday and Sunday’s. Many landlords struggling to maintain social distancing measures at weekends because of staffing budgets because profitable food sales had been moved to earlier in the week and at half price. People didn’t go out more, they just changed the day for a family or friends meal.

“Hospitality and leisure brands with disciplined leadership will thrive in a post-COVID landscape.”

Jonathan Goldstein, Cain’s chief executive, said at the time: “We firmly believe that strong hospitality and leisure brands with disciplined leadership will thrive in a post-COVID landscape.

“Prezzo has a clear vision for how to best serve its customers and communities and I am confident that the combination of Cain’s operational and financial expertise, the exceptional management team led by Karen, and the commitment of Prezzo’s entire workforce will enable the business to realise its full potential.”

Uncertainty about a reopening date for hospitality businesses and the treatment of rent arrears by commercial landlords have combined to force more restaurant operators into urgent talks with creditors.

The Unprecedented Year

Last year saw an unprecedented number of prominent chains, including the owners of Ask Italian, Pizza Express, Leon and Wahaca, resorting to insolvency processes.

Most of the chain’s employees have been furloughed for much of the last year under the Coronavirus Job Retention Scheme. Again a mirror image of smaller businesses, but time is running out. Since the start of December 2020, hospitality has already missed out on financially life saving events, such as Christmas Parties, Christmas itself and New Years Eve with Valentines Day, Mothers Day and Easter all set to be a wipe out.

Live Music, Charity Dinners and Nightclubs have all been badly effected. There is a shining light…somewhere…for hospitality, but I fear that unless someone starts to shout louder for the small business owner, they could well be a ‘hidden’ casualty of the pandemic, whilst the big chains get all the headlines.

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Business Coach, Author and Consultant. Has worked with BBC TV and Radio and Channel 4 on business matters. Trusted by Mercedes Benz, Hitachi Capital. Keynote speaker.