Prezzo Restaurant To Shut Down Its UK Branches
Ever since the issue of Brexit exploded around the world, the fate and future of United Kingdom became more uncertain. Businesses are on the brink of shutting down their operations or transferring it to other countries in hope of saving their investments. More employees and average-income earners are now limiting their spending and purchasing power because of the high inflation rate and most of them aren’t even sure whether or not they would still retain their jobs in a few months or years. It seems that the employees have a significant basis for their woes because Prezzo Restaurant, the largest Italian food chain in the United Kingdom, is set to shut down its operation across the country. This recent action would risk around thousands of people losing their jobs in the process.
Prezzo Restaurant to Shut Down its UK Branches Because of Brexit and Casual Dining Crunch
This famous Italian food chain just announced its 3rd branch closure out of its 300 UK Branches, putting at most 1,000 jobs and employees at risks of losing their main source of income. The said food chain was owned by TPG Capital, a private equity group in the US and although they already announced the 3rd branch closure, the mother company is hoping that they can still recover from the said loss. Together with Byron’s burger chain and Jamie’s Italian restaurant company, they are currently taking some precautionary steps, turnaround plan, and even exit strategy to keep the restaurant chain branches running to prevent any more closure.
One of the Main Reasons Why Restaurant chains Are Shutting Down Their Operations Is Because of the High-Interest Rates in Mortgage Rentals
Ever since the Brexit, the mortgage rates in the United Kingdom increased dramatically which forced giant restaurant and food chains to shut down their operations and restructure their company. In order to avoid the shutting down of more Prezzo restaurants, the TPG Capital is requiring the Prezzo creditors to reassess their financial footing and create a proposal to the restaurant landlords, asking for possible rent reductions. If not, the TPG Capital is urging the creditors to negotiate for a compromise to agree on a neutral rate. Aside from Prezzo, there are other 100 unprofitable outlets such as Chimichanga which is currently coordinating with restaurant landlords to come up with a proposal that will benefit both sides in order to keep their business.
The Restaurant Landlords Have Yet to Release a Statement About Prezzo’s Plan
The landlords have yet to release a comment or any actions about Prezzos’ plans, especially since the latter has yet to submit the final proposal of their draft. As of now, the only agreement these landlord hold is the CVA, or also known as the company voluntary agreement. However, while the negotiation is still ongoing and the current CVA is still in effect, around 1000-4500 jobs in the current UK workforce are at risk of shrinking. Which leaves the employees to only have two options when it comes to their fate: either they will be affected by the large downsizing or the current staff will be transferred to other restaurants that weren’t affected by the shutdown.
Prezzo Also Reveals How the CVA is Reshaping Ever Existing Business in the UK
Prezzo reveals that aside from the complications of Brexit, there are also other major factors that contribute to the restructuring of their company in the UK. Among these is the company’s battle against the increase of business rate, the “national living wage” which makes it difficult for the company to hire staff and increase their human resource. Aside from that, the customer’s confidence when it comes to spending was waning as long as the impending Brexit action still persist.
The CVA had already rescued some branches of Byron and Jamie last 2012-2013. And even if Prezzo directors claim that their company is doing better than the other two, they still claimed that the CVA policy will catch up with them sooner or later. The company stated that their current 5 Million British Pounds Profits and 11 Million Cash Deposits will soon be depleted if the UK fails to recover its global position in the business and stocks industry. It’s because the company’s current business outlook indicated that their sales are declining significantly compared to their performance last year.
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