Pizza Express to focus on upgrading sites as EBITDA falls 7.7%

Pizza Express is to focus its capital investment on upgrading its existing estate in the UK & Ireland, rather than adding new sites, as sales remained flat in the first half of the year.

Total sales for the UK & Ireland increased by 0.5%, but like-for-likes (lfls) were down 0.2% for the 26 weeks to 30 June 2019. It opened a net two new sites over the period, with its UK & Ireland estate totalling 480 as at the end of June.

Its international arm has seen solid growth, however, with total sales up 11.5% and lfls up 1.9%, contributing to an uplift in total sales for the group of 2.6%, and a lfls increase of 0.2% (on a constant currency basis).

Group EBITDA fell b y 7.7% to £32.4m, driven primarily by industry-wide cost pressures in the UK, it said.

The business said the focus over the period had been on upgrading existing sites in the UK & Ireland with further development of the ‘Future Express’ programme, and would continue to be the focus going forwards, said Jinlong Wang, group chairman and chief executive officer of Pizza Express.

Wang said that the business was pleased to have “remained resilient” across all of its markets in the first half of the year, despite sector-wide challenges, with cost increases offset its revenue growth.

“We will continue to maintain our focus on cost control, further improving productivity and efficiency, and are taking a measured approach to expanding our estate.”

He added: “Although we are not immune to the cautious consumer environment in the UK and Ireland, we are pleased to have delivered positive sales growth of +0.5% and a largely flat like-for-like sales performance.”

“The re-opening of our Langham Place restaurant earlier this year kick-started our ‘Future Express’ programme, in which we are creating more sociable pizzerias and a more inviting dining environment, with, for example a greater focus on our kitchens, a refreshed customer service approach and new uniforms,” he said.

The business has since refurbished a further six sites and said it was pleased with the increased sales performance it has seen to date with very positive feedback.

Among the highlights it noted the expansion of its vegan offering and strengthened relationships with partner such as Deliveroo. Wang said the business had particularly focused its summer menu development on its Leggera offering, with its under 600 calorie pizza range extended.

“Delivery remains a key part of our strategy and we have benefited from our strong partnership with Deliveroo. By participating in campaigns such as Deliveroo’s ‘Treat Yourself Tuesdays’ offer and launching a vegan virtual brand in certain restaurants, we saw a positive volume benefit,” he added.

Internationally, the brand has also been trialling new menus, new store formats and optimising its operating models in its international markets in order to appeal to changing consumer demands.

New formats have included PizzaMarzano Select – a smaller version of its standard site - which has shown early signs of success due to its simplified operations, reduced menu and enhanced use of digital technology for a better customer experience and improved satisfaction, said Wang.

Its international operations, with 148 sites, now makes up 21% of the group’s revenues. It had one net closure during the period (five openings and six closures).