Report by Iwan Lewis and Alan Evans
IT was confirmed this week that Italian chain Prezzo is set to close 94 stores in the UK.
The Carmarthen store located at St Catherine’s Walk is one of four Prezzo outlets in Wales set to close in an attempt by the company to rescue its business.
The Group operates several casual dining brands, including Prezzo, Chimichanga, Caffé Uno, Cleaver and Mexico in the UK. The Group’s core brand is Prezzo, which is a chain of Italian themed restaurants.
Prezzo is tenant of over 300 restaurants within their leasehold portfolio across the UK. Prezzo’s ultimate parent company and controlling party is Papa Jersey Topco Limited, incorporated in Jersey.
Although there could be significant job losses Prezzo claim they will help those affected by the closures.
In a recent announcement, a spokesperson for Prezzo said: “The proposal allows Prezzo to rationalise its estate and to reduce the cost of its leased restaurants. 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.
“Prezzo will be better placed to implement the changes required to refresh the Prezzo brand and to counter the economic challenges currently affecting the casual dining sector.
“This proposed restructuring, under the terms of a company voluntary arrangement (“CVA”), 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.
“Under the CVA process, Prezzo has submitted a restructuring plan to its creditors and will seek their approval of the CVA at a meeting on 23 March 2018. If approved by the creditors, the CVA proposal will substantially reduce Prezzo’s rental obligations and will move the business towards a more robust business model. Where restaurants are closed, we will do everything possible to redeploy staff to other sites.
The rescue proposal divides the stores into several different categories, which range from (a) moving to monthly rents (including turnover rent on a pro rata basis), service charge and insurance (rather than quarterly) across the portfolio, to assist with cashflow;
(b) achieving rent reductions across a group of restaurants that are unviable at current rent levels;
(c) the renegotiation of certain commercial lease terms for a group of restaurants that are generally uneconomical;
(d) exiting those restaurants that cannot be made viable even with a rent reduction;
(e) terminating leases relating to restaurants that are not trading by the Group; and
(f) addressing certain contingent landlord claims.
Where restaurants would not be profitable even after applying a rent reduction, they will have a rent reduction applied for eight (8) weeks after which point the leases will be terminated. These Leases will be Category 4 Leases.
The store at St Catherine’s Walk is a category 4 lease.
The other Prezzo restaurants, which may be set to close in Wales include Abergavenny, Penarth and Chimichanga in Cardiff.