Troubled casual dining chain Prezzo owes banks and suppliers more than £220m, according to the Company Voluntary Arrangement (CVA) it announced last week.
While £154m is owed to secured creditors such as Barclays Bank, AIB Group and RBS, dozens of unsecured trade creditors are collectively owed nearly £66m.
The 169-page CVA document, seen by FEJ, shows the level of exposure that catering equipment suppliers currently have to the business.
Extracair Installations, the Dorset-based ventilation and catering projects specialist, is owed £217,414, while Lockhart Catering Equipment is owed £67,757, presumably for catering equipment and supplies purchases. Nella Cutlery, the knife sharpening service and food processing equipment supplier is owed £22,462.
Prezzo also has outstanding debts with a handful of other catering equipment partners, but these total a much smaller amount. This includes Nisbets (£1,627), Hobart (£1,497), Bunzl Catering Supplies (£605), Jestic (£271) and Hoshizaki (£83).
There is nothing at this stage to suggest that suppliers won’t recoup the money they are owed. However, they will be waiting with bated breath until March 23, when creditors decide whether to approve the CVA. It needs a 75% vote in favour to go ahead.
Unsecured creditors will receive a greater return on the amount owed to them in the CVA than they would do if Prezzo was to enter administration, which is the likely scenario if it doesn’t get approved.
Kitchen equipment suppliers such as Extracair and Lockhart are from the largest unsecured trade creditors, however.
The CVA document reveals that drinks Wholesaler Matthew Clark is owed nearly £1m, British Gas £600,000 and Reynolds Catering Supplies £364,000.
Prezzo plans to axe 94 restaurants as part of its restructuring plans and is calling on landlords to agree rent reductions.
“This will allow the company to focus its resources on the core, more profitable restaurants whilst continuing to meet its obligations to suppliers and creditors,” the company explained. “This proposed restructuring will allow Prezzo to continue operating while it implements plans to improve its food and service and to invest in new restaurant layouts and designs.”
As well as Prezzo, the group operates several casual dining brands, including Chimichanga, Caffé Uno, Cleaver and MEXIco in the UK.
Prezzo’s revenues fell 3.3% year-on-year for the 12 months to December 2017 and 8.1% on a like-for-like basis, according to the CVA. Directors of the chain blame the sales decline on competition from other Italian high street chains and fierce discounting, as well as higher staff, input and business rates costs.
They described the current business model and associated cost structure as “no longer viable” in a number of cases, particularly locations with low revenue levels.
“Rental costs associated with underperforming restaurants are unsustainable. Many restaurants are loss-making at an operating level and sales per square foot are significantly below other casual dining chains. The directors have noted that consumer preferences favour restaurants with strong brand identification and an efficient food and restaurant layout.”
Jamie’s Italian and Byron Hamburgers have also announced CVAs this year as difficult trading conditions have hit the casual dining sector.