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Sat 16th Mar 2024 - Exclusive: Prezzo returns to profitability as it looks to ‘create its own space in the casual dining market’
Exclusive: Prezzo returns to profitability as it looks to ‘create its own space in the casual dining market’: Dean Challenger, chief executive of Prezzo, the Cain International-backed Italian dining group, has told Propel that the business returned to profitability in FY23, and going into FY24, it is delivering against a long-term business plan which will see the brand “create its own space in the casual dining market”. Prezzo shut 46 branches last April in a formal process to save the business from administration under a restructuring plan to leave it with an estate of 96 restaurants. In the group’s accounts for the year to 1 January 2023, it reports revenue of £134.7m (2021: £94.9m), with gross profit margin of 35.6% (2021: 31.2%), and a pre-tax loss of £31.558m (2021: loss of £23.435m). Challenger said that the results for the financial year 2022, which included an Ebitda loss of £4.8m (2021: £4.3m), represent a “different business to the Prezzo of today”. He said: “FY22 was like a lifetime ago for Prezzo with the strategic reset completed with the restricting plan last year and a genuinely market leading management team assembled. We are at the start of a very exciting journey. We traded ahead of plan in the second half of FY23, and despite the difficult trading conditions at the start of the year, we remain on plan with a number of exciting and significant opportunities to be delivered in 2024. In April 2023 we reduced the estate, and the central overhead that went with it, to 96 sites which were profitable, and in management’s view, capable of delivering sustainable growth for the future. This, combined with continued investment in a strong executive team saw the business return to profitability in FY23 and going into FY24, we are delivering against our exciting long term business plan which will see Prezzo create its own space in the casual dining market. Profitability in FY24 is underpinned by significant contracted reductions in utilities, consistent improvement in our customer metrics, exciting food innovation and a new approach to marketing which will go live with our spring menu change on 30 April. During the year, we will invest in our restaurant refurbishment programme, which has seen strong return on investment, and look at exiting new revenue streams in retail and food on the go. The long-term outlook for Prezzo is positive and we would like to thank our teams and partners for all their hard work and commitment to sharing the joy of Italian dining.” Challenger told Propel that the group has no external debt, with all funding coming from shareholders, while it has a utility hedge in place delivering £2.8m of annual saving in FY24. He also intimated that the business could look to return to the expansion trail this year, with one or two new sites under consideration. Earlier this year, he said the brand could expand to around 120 but that the business will never return to the size it was in the middle of the last decade, which was around the circa 300-mark. He told The Telegraph earlier this year that casual dining chains like his no longer work in some parts of the country, such as small towns and more rural locations, because of high costs and soaring taxes. He said: “Any new sites that we look at will be in high footfall areas where people are looking for a brand they know. Shopping centres normally prefer to use chains because of the brand recognition – there’s less risk – and there will always be a space for casual dining brands wherever there’s tourists.” In January, it was reported that the company was preparing to open its own chain of takeaway pasta shops in train stations, as casual restaurant chains come under pressure. It has since trademarked the name Prezzo Pronto. On when a first site will open under the new format, Challenger told Propel: “It is at the start up stage, so not in the near future, but is very much part of the business plan.” He also confirmed that the business is planning to launch a brunch menu in its restaurants later this year to help make them busier during times of day that are usually quiet. In 2023, further financing facilities were put in place for the business, namely an extension to a shareholder loan facility from £24.5m to £28.9m. Three tranches of funding were received by the business last year: £1m on 30 January 2023, £1.4m on 19 May 2023 and £2m on 7 July 2023. Prezzo features in the Propel Turnover & Profits Blue Book. Its turnover of £94.9m is the 72nd highest in the database. The Blue Book ranks companies by turnover, profit and profit conversion, listing directors’ earnings for the past five years. Companies can now have an unlimited number of people receive access to Propel Premium for a year for £995 plus VAT – whether they are an operator or a supplier. The single subscription rate is £495 plus VAT for operators and £595 plus VAT for suppliers. Email kai.kirkman@propelinfo.com to upgrade your subscription. 

London tops table of best European cities for food: London has been crowned the foodie capital of Europe, with an analysis showing its restaurants have better reviews than anywhere else on the continent. The Times reports that the capital even outshone Paris — widely considered the home of fine cuisine — which came in second place. The study analysed Tripadvisor data to find the number of five-star reviews for restaurants across 193 European cities. It found that London had 2,906 reviews with a five-star rating, followed by Paris, which had 2,898. Barcelona came in third place with 1,475, followed by Rome and Athens. Madrid, Lisbon, Berlin, Prague and Milan made up the rest of the top ten. Dailybase, the Dutch lifestyle magazine that conducted the research, said: “London is renowned for its traditional pub culture, where you’ll find homemade pies and roast dinners, as well as a plethora of Michelin-starred restaurants to tantalise your taste buds, making it the perfect destination for your next city break.” The analysis follows the publication of the latest edition of the Michelin guide last month, which showed that London now has 80 Michelin-starred restaurants, including six three-star venues. Before the pandemic, London had 70 Michelin-starred restaurants and only three venues with three stars. The French guide still rated Paris more highly, with 118 starred restaurants, including nine three-star venues. Nonetheless, the guide said it had been “a great year for London” and that it was a “cause for celebration” that The Ledbury in Notting Hill, west London, had become the capital’s sixth three-star restaurant. Yet while London’s culinary scene appears to be having a moment, the UK as a whole is still lagging behind Europe. In total, the UK has only 187 Michelin-starred restaurants compared with 661 in France, 392 in Italyand 269 in Spain. Even Germany, famous for bratwurst and sauerkraut, has more award-winning venues at 314. London accounts for 42% of Britain’s starred restaurants whereas Paris contains only 21% of France’s. The latest findings may help to boost food tourism to London. Daniel de Voer, the editor of Dailybase, said: “Discovering the best cities in Europe for foodies, whether this be fine dining experiences, local cafés or quirky bars, is not only fascinating, but could inspire your next travel destination.”

McDonald’s apologises for technical issues: McDonald’s has apologised for the technical problems which left UK consumers unable to order food from its restaurants early yesterday (Friday) morning. Customers in Japan, Australia, New Zealand, Germany and Austria were also unable to order food owing to a series of IT issues. Problems started in the early hours and continued throughout the morning but were resolved by early afternoon. McDonald’s said the issue was unrelated to cyber-security and apologised to customers. “We are aware of a technology outage which impacted our restaurants. The issue has now been resolved in the UK and Ireland,” the company said in a statement. “We thank customers for their patience and apologise for any inconvenience this may have caused.” Franchisee Sarah McLean, who runs a portfolio of 21 restaurants in the East and West Midlands under her McLean Restaurants business, said all of her 21 branches had been affected. “My restaurants were impacted very early in the morning, so thankfully the impact wasn’t too significant, about an hour and a half,” she told the BBC. She added that during that time, they “couldn’t serve anyone”. Downdetector, a system used to monitor IT problems in businesses, noted a spike in issues with the McDonald’s UK app from around 5am on Friday. The fast-food chain has about 40,000 restaurants worldwide, with around 1,450 across the UK and Ireland. Last month, Chris Kempczinski, chief executive of McDonald’s, said digital engagement with the brand had reached an all-time high in the UK, and that the business is well-positioned to maintain the balance between price growth and traffic growth. He was speaking after the company posted global like-for-like sales were up 3.4% in its fourth quarter and 9% in the full year, with its UK business seeing “strong” growth.

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