The high street restaurant shake-up looks set to claim another victim this week, with Prezzo reportedly preparing a Company Voluntary Arrangement (CVA) that will lead to the closure of up to 100 stores.
Prezzo warned in its financial accounts last year that the casual dining market was encountering a “turbulent” time and its worst fears appear to have been realised despite efforts to rein in costs and offload unprofitable sites.
The chain, which numbers 300 branches in the UK, is understood to have recruited the services of turnaround specialist AlixPartners to assist with the plans, which include shutting down its Tex-Mex chain Chimichanga.
Prezzo will seek talks with landlords in order to secure rent reductions at many of its restaurants as it looks to improve its finances. The business is owned by private equity firm TPG Capital, which paid more than £300m for it three years ago.
Neither Prezzo nor TPG Capital have commented on the situation, but Sky News said the CVA proposals would be unveiled “in the next few days”, citing a source familiar with the proposals.
Prezzo employs more than 4,500 staff and hundreds of jobs are expected to be lost as it vacates sites.
The likes of Byron Hamburger and Jamie’s Italian have already turned to CVAs this year in a bid to stay afloat. It is viewed as a better alternative to going into administration or liquidation as it means companies can continue to trade and focus on the more profitable parts of their business.
Prezzo has faced difficulties for more than year. In its last set of financial accounts, for the year to January 1 2017, it spoke of the “turbulent” time that the market was facing, with the company admitting that declining consumer visits, rising cost pressures and over-expansion in some locations had created a “downward pressure” on profit margins.
Last year it began an estate review that resulted in the active marketing of a number of “uneconomic” restaurants and bosses reduced the number of planned new openings.
Prezzo made a profit of £3.8m on sales of £218m for the last full year for which accounts are publicly available.