Wednesday 29 August 2018 12:21 pm

Margin pressure and bad weather take a slice out of Pizza Express profits but overall sales grow

Pizza Express unveiled what it called a "resilient" performance today, despite pressure on margins driving down profits.

The restaurant chain, which is owned by Chinese private equity group Hony Capital, has faced cost pressures as well as a significant impact from this year's changeable weather.

The figures

Group turnover in the 26 weeks to the beginning of July grew 2.5 per cent to £282.8m, despite a 1.1 per cent decline in like-for-like sales.

In the UK and Ireland, like-for-like sales slipped by 0.7 per cent, although this includes the impact of cold weather earlier in the year which led to the temporary closure of as many as 90 restaurants. Excluding this, comparable sales ticked up 0.9 per cent.

Meanwhile the chain continued international expansion with 15 new openings, pushing total sales up by 10.4 per cent although comparable sales dropped by three per cent.

Earnings before interest, tax, depreciation and amortisation (EBITDA) came in at £35.1m, marking a 16.3 per cent drop on the previous year.

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Why it's interesting

Like many restaurant chains, Pizza Express has been impacted by inflationary pressure on food prices, as well as a host of other extra costs.

Casual dining has been hit especially hard, with fellow Italian brands such as Jamie's Italian, Carluccio's and Prezzo slashing their estates.

But Pizza Express struck a positive note in today's update, calling its performance "resilient" and noting new developments which it hopes will improve the customer experience. These included introducing an app which lets customers pay on their phones, which has proved popular.

Younger customers are also being targeted with a wider vegan offering and student discounts.

A key challenge for the company is to pull off its expansion in China, where growth has been slower so far this year. Pizza Express chief executive Jinlong Wang said of the market: "We strongly believe China offers a significant long-term structural growth opportunity, and we are focused on getting our model right in that market."

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What Pizza Express said

Jinlong Wang said: “Looking ahead, we expect the UK trading environment to remain challenging. The strength of our brand means that our trading performance has been resilient in such conditions, however more than ever we are looking at how we improve and develop our business to better enhance our customers’ experience. We remain committed to our international markets and are working hard to refine our offer overseas.”

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