Analysts at Numis Securities have lowered their full year 2009 profit forecasts for Prezzo from £13.7m to £10.8m, as a result of increasing pressure on the restaurant group’s margins. The broker issued the update following an analysts meeting, saying that the company faced added cost challenges next year due to changes to legislation on the minimum wage, after Prezzo admitted that it might need to see a 3% sales increase just to offset higher wage costs. The comments came as the Italian restaurant chain operator reported a 38% fall in pre-tax profits to £2.9m for the first half of the year, down from £4.7m in 2007. In a press conference, Prezzo said that food and drink cost rises had taken 1% out of margins in the first half. Numis said that it had cut its rollout assumption for 2009 to just 10 new restaurants after the restaurant operator said that it had decided to slow its expansion amid concerns about weaker consumer spending. The broker also reduced its full year profit forecast for this year by £400,000 to £11.5m and said that impairment costs were likely to be an ongoing feature in the current climate, with Prezzo reporting a £1.8m below the line charge in the first half due to underperforming units. Prezzo said that London trading remained robust and that its Leisure Parks outlets appeared to be performing strongly. It said that it had seen a surge in sales in the last couple of weeks following a recent two-for-one promotion. Numis cut its price target from 61p to 56p.