A decisive 88% of casual dining chain Prezzo’s creditors gave their approval to restructuring proposals set out under its Company Voluntary Arrangement. Here’s how bosses intend to turn around the business now that its plans have been rubber-stamped.
1. Four core pillars
Prezzo plans to close 94 restaurants and is seeking rent reductions on others as part of a Company Voluntary Arrangement announced earlier this year. But the CVA also details how it intends to move forward if creditors vote in favour of the proposals, with the focus on a ‘transformation plan’ that includes four core pillars dedicated to brand, food, people and estate.
2. New layout and design
In order to establish a strong core estate, restaurants are being redesigned by adopting what directors describe as a “new look and feel model”. It is envisaged that the top-performing restaurants will have a new layout and design aligned to brand identity, refurbishment and maintenance.
3. Strong brand identification
Rental costs associated with underperforming restaurants are unsustainable, the brand has said. Many restaurants are loss-making at an operating level and sales per square foot are significantly below other casual dining chains. Prezzo directors have noted that consumer preferences favour restaurants with strong brand identification and an efficient food and restaurant layout.
4. Cover growth and customer satisfaction
While the transformation plan is only in its early stages, “significant” improvements in cover growth, reduced team turnover, customer satisfaction, cost control and revenues have been recorded in restaurants that have been revamped already, the chain claims.
5. Rationalised estate
Bosses at the firm implemented a cost savings initiative last year that delivered £10m of annualised cost savings in 2017. This will allow for further capital investment in core sites regardless of the disposals that it is carrying out. Prezzo says the CVA will give it the ability to rationalise its estate by exiting restaurants that are unprofitable, securing rent reductions where restaurants are over-rented and facilitating negotiations with landlords of restaurants that have leases containing “onerous” terms.