Heart with Smart Group –operator of the Pizza Hut Restaurants and Itsu franchises – reduced its losses by £28.5m, in the year to 5 December 2021, to £2.9m, and said it is “actively seeking additional brand partners”.
Reporting its accounts at Companies House, for the period from 30 November 2020 to 5 December 2021, the group said turnover rose by 0.2% to £129.6m, but that due to the impact of the pandemic “like-for-like sales results are not meaningful to report”.
Taking into account net exceptional items, overall loss for the period was £9.7m, compared to £32m the prior year.
During the period from January to March 2021, when lockdown restrictions were in place, it made use of its working capital facility to draw a further £6.5m of borrowing from its existing lenders.
The group said trading performance during the summer school holidays last year exceeded expectations and led to a significantly improved cash position.
It continued to build on that base through strong operations and careful cash management, it said, with the group’s cash balance having grown to just under £15.7m at the year-end – an increase of £6.9m year-on-year.
“This robust position will help the group withstand future economic turbulence and to increase our investment in growth.”
During the year the business also completed the “step change” in its model to a fast-casual experience, by utilising digital technology such as mobile order and pay, which had been developed during the pandemic.
Heart with Smart, said its strong cash balance also allowed it to invest further to provide high-speed, stable wifi in all its restaurants to improve the customer experience.
“Additionally, during 2022 we will trial the use of kiosk ordering to provide yet more choice and control for our guests.”
Since trading restrictions were lifted, the group has also reintroduced its weekend buffet, and is continuing to build on delivery – now a major platform for the business.
Pizza Hut (UK) Limited underwent a CVA September 2020, with the business having successfully engaged with many landlords to agree mutually agreeable lease tents in advance of the end of the CVA period, which was set at two years.
The last financial year also saw it develop a franchise partnership with Itsu. At the time the accounts were approved it had opened three Itsu restaurants, in Reading, Edinburgh and Chelmsford, with the fourth recently opening Aberdeen – two of which were conversions of former Pizza Hut restaurants.
The group said it expected to open a further two sites before the end of 2022, before an acceleration of the development programme in 2023.
“We are actively seeking additional brand partners with whom we can marry our operational expertise and comprehensive infrastructure to develop further sites and build brands across the UK.”
Commenting on the new challenges of rising energy and food prices, the directors said that “once again the tremendous energy and ingenuity of this vibrant sector will be called on to sharpen business models, reduce any remaining inefficiencies and continue to find new ways to bring great hospitality to our guests”.
“Management believe the long-term fundamentals of the market, grounded in long-term economic growth, long-term growth in real earnings and the highly-valued experience of eating out, continue to be strong,” it added.
At the year-end Pizza UK Restaurants operated 169 restaurants (with a further four closing since the end of the accounting period), compared to 214 the prior year.
Jens Hofma, CEO Pizza Hut Restaurants UK and the Heart with Smart Group will be speaking at MCA’s Restaurant Conference on 22 September.
He will tell the story of how his newly named group, Heart with Smart, went into franchise partnership with itsu to open regional sites, how this new entity came about, the experience of taking on a whole new brand, and how it is performing so far.
To find out more about the Restaurant Conference or to book tickets please click here.
