PizzaExpress this morning said it would be investing "significant" money to refurbish its poor-performing older restaurants as profits for the year to 30 June fell 0.5% despite a 15% rise in group turnover to £213.7m.

An analysis of like-for-like sales in what the group's chief executive, David Page, called "an increasingly competitive market" showed restaurants over 10 years old saw a 3% drop in like-for-likes.

Total UK and Ireland pizza restaurant like for like sales for the year were up 1%, after a fall of 1.5% in the second half. However, the total figures hide considerable regional variance, with like-for-like sales up 5% year-on-year outside the M25, and down 3% year-on-year inside the M25.

Page said the impact of tough trading had been greatest within the M25 because that was where the majority of the group's older, more profitable restaurants are located, and London had also been hit by a substantial decline in tourism.

Page said many of the underperforming sites more than 10 years old were "overdue" for complete refurbishment, while others could do with improvements. Capital expenditure was being increased this year "to ensure that our restaurants continue to be pleasant places to dine, are pleasing on the eye and retain their existing customers," he said. Page said the group's experience refurbishments of older restaurants was that like-for-like sales "can be restored to levels consistent with more modern restaurants".

He said 300 PizzaExpress restaurants were trading at the year-end, after 27 new openings during the year, nearly two thirds outside Greater London.

Like for likes at Cafe Pasta were up 1%, but operating profit was flat. More sites are being sought and new restaurants with an improved menu are being built in York and Clapham, Page said. PizzaExpress To Go was opening its second outlet, at Victoria Station in London, this autumn.

The venture into selling PizzaExpress products in supermarkets was having "a minimal effect" on restaurant sales, Page said, and the group was looking at "further opportunities" within the retail sector. PizzaExpress product are now being sold in 134 Waitrose stores as well as in J Sainsbury.

In the International division, there were now 43 outlets, five company owned, two joint ventures and 36 franchised in 17 different countries. Three company owned restaurants were opened in Spain during the year and 14 franchised locations started trading in eight territories. The group is developing the first French company-owned unit, in Toulouse, which will open at the end of the year. Turnover rose 50% to £3.9m. and the net loss fell from £1,5m to £1.2m.

During the year £20.8m was spent on new restaurants and £6.6m on existing restaurant refurbishment and improvements, PizzaExpress also paid £2.0m to acquire Kettners restaurant and £1.5m for the Gourmet restaurants.

PizzaExpress year to 30 June 2002

Group turnover

£213.7m

+ 15%

Profit before tax and exceptionals

 £39.7m

- 0.5%

Group operating margin

18%

-3.4 points

UK/Ireland PizzaExpress restaurants turnover

 £195.2m

+12%

UK/Ireland PizzaExpress restaurants operating profits

£40.1m

-2%

Cafe Pasta turnover

 £9.0m

+32%

Cafe Pasta operating profit

£0.2m

+0%

Retail division sales

£4.3m

+287%

Retail division net profits

£2.2m

+214%

International division turnover

£3.9m

+50%

International division net loss

-£1.2m

+20%

Post-exceptionals basic eps

35.8p

-8%

 

PizzaExpress like-for-like sales to 30 June 2002

UK/Ireland like-for-like sales 2nd half

-1.5%

Full-year UK/Ireland like for like sales

+1%

Like-for-like outside M25

+5%

Like-for-like inside M25

- 3%

Like-for-like at restaurants over 10 yrs old

-3%

Cafe Pasta like-for-like sales

 +1%