Pizza Express earnings hit by casual dining crunch
Pizza Express profits declined in 2018, after a year of challenges in the UK and fierce competition in China.
Group turnover was up 1.6% to £543 million, but underlying earnings declined by 15.3%.
The company said this was partly down to challenges in some of its less developed international markets, including China where it has been pursuing a major expansion of the brand.
Chairman and chief executive Jinlong Wang said the business faced “intensifying competition from local brands” in China and was focused on adapting to changing consumer demands in the market.
Nevertheless international markets now generate just under 20% of group sales, following the opening of 26 new sites in 2018.
In the UK, higher wages and property costs weighed on profitability amid a devastating year across the casual dining industry.
Several of Pizza Express’s peers such as Prezzo and Carluccio’s closed swathes of restaurants last year using an insolvency process known as a Company Voluntary Arrangement (CVA)
But Zoe Bowley, managing director for Pizza Express in the UK and Ireland, told the Press Association earlier this year that the chain would not be the next victim of the casual dining crunch.
“Certainly, the cost pressures that we’ve seen in the last couple of years have been really tough,” she said.
“I think what it forces you to do is appraise your business model and understand how you can take appropriate costs out.”
Underlying like-for-like sales at the UK chain grew 0.1% in 2018. This excludes the impact of cold weather last year when the Beast from the East forced the company to temporarily close some of its stores.
Mr Wang said: “Looking forward, whilst we expect both the UK and international markets to remain competitive we are confident that our focus on customer-led innovation and investment in our brand and our people will put us in a strong position to succeed in this environment and continue to deliver a resilient performance.”