In a bid to stop the chain from collapsing, Pizza Hut’s landlords have agreed to cut their rent after voting through an insolvency deal which will see 29 restaurants close and let up to 450 jobs go.
The landlords and creditors voted in favour of the insolvency process known as a Company Voluntary Arrangement (CVA), which will see the chain take a reduction on future bills in order to keep the company from going bust.
Crucially, however, the deal means that a further 215 Pizza Hut outlets will be able to keep trading, which will save 5,000 jobs and allow Pizza Hut takeaways to continue without being affected.
Had the vote not been passed, the pizza chain would have fully collapsed without any extra funding. It’s important to note that a CVA can only be granted by the courts if a company can show that, without the support, it will face administration.
A spokesperson at the chain said: ‘The Company Voluntary Arrangement for Pizza Hut Restaurants, (PHR – the UK dine-in franchise business of the global Pizza Hut brand), is now approved.
‘We are delighted to have reached such a constructive position in partnership with our landlords and creditors.
‘We appreciate the support of everyone involved and this outcome provides us with a strong platform to secure the long-term future of the business including over 5000 jobs and over 200 restaurants.’
With the chain’s sales unlikely to bounce back until 2021, the CVA is a real lifeline for the business during these uncertain times.
In other sectors, such as retail and hospitality, landlords have come under immense pressure following a wave of high-profile CVAs in recent months.
Be that as it may, landlords and creditors have continued to vote favourably on CVAs, preferring to secure agreements based on lower rents rather than risk pushing retailers or restaurant chains towards more severe insolvency processes by rejecting proposals.