S&P – PizzaExpress ‘highly likely’ to launch capital restructuring: Credit rating agency Standard & Poor has said the recent agreement of a new £70m loan facility by PizzaExpress is only an “additional step toward a likely broad restructuring of the group’s capital structure”. In March the Hony Capital-backed PizzaExpress announced the issuance of a £70m super senior term loan facility, which has been fully drawn to redeem the £20m revolving credit facility and a £10m super senior loan, both due in August 2020. S&P stated: “Although, after close examination of the new debt documentation, we do not consider this transaction distressed – because the terms of the existing debt documentation have been respected – we believe the issuance of this new super senior debt is only an additional step toward a likely broad restructuring of the group’s capital structure. We expect to revisit our ratings on PizzaExpress when the terms of the ongoing restructuring plan are defined and published, including the terms of any potential debt-for-equity swap, or other restructuring transactions.” PizzaExpress’ capital structure currently comprises the new £70m facility due March 2023, the £465m senior secured notes due August 2021, and the £200m senior unsecured notes due August 2022. The new super senior facility is set to mature at the earlier of May 2023 or two weeks before the maturity of any material indebtedness in the capital structure. S&P said: “The negative outlook reflects our view a restructuring of the company’s capital structure in the short term is highly likely given PizzaExpress’ weak earnings prospects and the approaching maturity of the £465m senior secured notes. The outlook also incorporates the additional hurdles PizzaExpress is facing in turning around its weak operating performance amid an extremely challenging competitive environment exacerbated by the covid-19 pandemic. We could lower the rating on PizzaExpress if it entered a comprehensive debt restructuring, declared a conventional default, completed a transaction akin to a distressed exchange on any of its outstanding debt facilities, or if it entered into any scheme of arrangement. Although unlikely over the next six to 12 months, we could raise our ratings on PizzaExpress if its operating performance recovered rapidly and we saw signs of its standing in the credit markets sustainably improving. Any upgrade would depend on PizzaExpress’ ability to refinance its maturing debt at par, decreasing the likelihood of a debt restructuring or repurchases below par in the future.”
Boparan Restaurant Group chair and CFO step down. in talks on circa 40 Carluccio’s sites: Laurie Mcilwee and Simon D’Cruz, chairman and chief financial officer respectively, have stepped down from Boparan Restaurant Group (BRG), Propel understands. Mcilwee, the former Tesco group chief financial officer, joined BRG – the Giraffe, Ed’s Easy Diner and Slim Chickens operator – in May 2017, while D’Cruz, the ex-head of financial planning at Domino’s, joined the business at the start of 2018. Earlier this year Tom Crowley stepped down as chief executive of BRG and was replaced by Satnam Leihal, who played a key role in the management team within the larger Boparan organisation. Propel understands despite the coronavirus pandemic, BRG remains in good shape and is “looking beyond the current situation, with the leadership team continuing to drive the business forward”. BRG is currently in exclusive talks to acquire the rump of the Carluccio’s business, which was placed into administration at the end of March. It is thought BRG fought off competition from Three Hills Capital, the backer of Byron, for Carluccio’s. However, it was unclear how much of the 71-strong Carluccio’s that BRG was in talks to acquire. Propel understands BRG is in talks for between 40 to 45 Carluccio’s sites and the brand, with others being marketed by Lambert Smith Hampton. It is thought of the sites BRG is not in talks to take, deals have been agreed on the majority, including a handful with Tesco for its Express format. Sites thought to be still available include the Carluccio’s in Bankside, Kingston and Gloucester Quays, with the former having an annual base rent of £204,000. It is thought BRG has between two to three weeks to complete a deal. Geoff Rowley and Phil Reynolds, partners at FRP Advisory, were appointed joint administrators of Carluccio’s at the end of March.
Individual Restaurants MD and FD step down: Vernon Lord and Peter McCulloch, managing director and finance director respectively, have stepped down from Individual Restaurants, which operates 30 sites under the Piccolino and Restaurant Bar & Grill brands, Propel understands. Lord, formerly of Inventive Leisure, joined Individual Restaurants in 2004 after Derek and Edwina Lilley, the couple who founded the Est Est Est chain, secured £18m backing to expand their latest two ventures, the Restaurant Bar & Grill and Piccolino, across the UK. In 2011, a consortium called W2D2 bought and delisted Individual Restaurants. W2D2 was led by Individual Restaurants founder Steven Walker and Iceland founder Malcolm Walker. Steven Walker remains chief executive of Individual Restaurants, which in 2015 entered into a joint venture with chef Gino D’Acampo, to launch new restaurant brand Gino D’Acampo – My Restaurant. McCulloch, the ex-director of finance at Revolution Bars Group, joined Individual Restaurants at the start of 2017.
Tortilla to reopen eight sites, including first delivery kitchen: Tortilla, the Quilvest-backed fast-casual Mexican concept, will reopen eight of its sites this week, including its first delivery kitchen unit, Propel has learned. The Richard Morris-led business shuttered its entire 42-strong estate on 23 March but will reopen its sites for delivery and collection in Brighton, Canary Wharf, Clapham, Hammersmith, Islington, Putney and Wimbledon on Tuesday (12 May). It will also open its first delivery kitchen in the Deliveroo Editions in Crouch End on the same day. The company is also looking at potentially reopening a further four sites the following week, in Finchley Road, Guildford, Southwark and Richmond. Speaking to Propel last month, Morris said: “We feel it’s time to get moving again, albeit in a few locations with strong delivery and takeaway trade. To reopen a hibernated business takes time and process so this will get us moving as the lock-down hopefully softens over the coming months. Employees and customers will be the priority, so we will be maintaining social distancing in all restaurants.”
Pure co-founder – landlords need to recognise they’ve played a part in creating problems: Spencer Craig, co-founder of healthy food-to-go concept Pure, said he hopes the current crisis acts as a catalyst for the redefinition of the tenant and landlord relationship. Craig said he hoped landlords recognised what the 21-strong Pure and its peers brought to the big officer developments in which – or near – where it trades. He told Propel: “We are in office locations, which means we are part of the reason people come back to the office, and recognition of that from landlords is needed. As tenants we have to accept the starting point here is if we get back to the old sales levels, old rent is due and landlords are businesses, and they have bills and staff to pay, I totally accept that – but so do we. Their income is rent, our income is sales, but we’ve got no sales. The landlords really need to start thinking about this as a partnership and they have played a part in creating some of these problems. Often on sites you are bidding against other operators and landlords are using that to not only get the highest rent on one site, but also where they have 20 sites nearby they can use that increase to press up the rents everywhere else. The other problem is they have accepted the terms of those companies in company voluntary arrangements or administrations. Therefore, you have got the weaker companies coming into this paying 30% of their rent next door to you and we are still paying 100%. So, the person next door, who was in trouble before, is now paying far less than us, who were strong.” Craig said landlords and operators have to “stop shouting at each other from the side lines”. He said: “We are in this together.”
Greggs undertakes trial at small number of shops: Food-to-go retailer Greggs has reopened a small number of stores as it continues to trial safety measures. The Newcastle-based company is selling its products at an undisclosed number of shops in the Tyneside area. The gradual reopening process has followed a series of trials with staff testing working practices while remaining shut to customers. A Greggs spokesman said: “We are initially operating shop trials behind closed doors in order to test the effectiveness of our new operational safety measures. We will continue to review this and will invite walk-in customers into our shops only when we can do so in the controlled manner we intended.” Chief executive Roger Whiteside issued a statement on the company’s website, stressing the trials were in line with the government guidelines. He said: “These trials are being conducted across a number of channels, including delivery through Just Eat, click-and-collect and walk-in customers. Colleague and customer safety continue to be the primary focus of the decisions we take as we start to reopen our shops. Thank you for your patience while we work hard to play our part in getting the nation back up and running again and serving the communities in which we operate.”
Thornbridge repurposes pubs as bottle shops, online sales up more than 2,500%: Derbyshire-based Thornbridge Brewery has repurposed its pubs as bottle shops while it has seen more than a 2,500% increase in online sales as it diversifies the business. With the company “standing to lose 60% of its revenue overnight” as hospitality venues closed, its pubs have implemented call-and-collect options and a drive-thru beer collection available at those sites with car parks. Thornbridge has also focused its efforts on its online shop and packaged products, while ensuring staff health and safety. Online sales are up more than 2,500% following a direct focus to attract new and existing customers and diversifying its beer options to fit with the “at home” drinking market. Beer destined for cask has instead been produced as bottle conditioned beer. New beers destined mainly for keg have again been diverted to packaged product. To help support the community, Thornbridge designated its taproom and pubs as drop-off points for local food banks. Meanwhile, it is supporting front line staff with a 25% discount for all NHS workers for beer ordered via its online shop, brewing beer to support NHS Charities Together and is planning a number of parties to thank NHS staff when pubs reopen. Thornbridge co-founder and chief executive Simon Webster said: “Everyone has worked extremely hard to ensure the business continues. We have had the opportunity to drive sales in certain areas in order to achieve some quite incredible figures. I must extend our utmost gratitude to customers, both new and old, for supporting our online business, our trade and retail contacts for keeping supply chains open and our own suppliers for supporting us in so many ways. We hope when the wider industry returns we will be here to stand alongside fellow organisations and help strengthen business together.”
Pret to offer organic coffee products through Amazon: Pret A Manger, the JAB Holdings-owned business, has linked up with Amazon to offer consumers some of its organic coffee range. The company has made three flavours available – a light roast single-origin, its own classic blend and a dark roast. The company is reopening a further 71 shops from Monday (11 May) and adding more of its menu. The company will begin reopening sites outside London taking the total to more than 100. Another 55 shops are opening in central London along with outlets in Birmingham, Brighton, Bristol, Cambridge, Croydon, Edinburgh, Glasgow, Leeds, Manchester, Oxford, Reading, St Albans and Tunbridge Wells.