Pizza Express and Wagamama show signs of recovery after private equity and pandemic struggles
Wagamama, Dominos and Pizza Express are among a cluster of top restaurants in the UK which have seen their profits increase in the last six months, new research shows, as the market slowly shows signs of recovery.
The combined profit of the top 100 restaurants in the UK rose from £19.9m in September 2022 to £241.8m in March 2023, figures from accountancy firm UHY Hacker Young show.
This amounts to a three per cent average profit margin for the UK’s biggest restaurant groups – a marked increase from the 0.5 per cent average profit margin recorded in September of last year.
During the 2010s the UK high street was littered with chain restaurants after private equity groups piled into the sector, loading up brands such as Pizza Express with debt laden plans of expansion.
In 2021, the former finance chief of TGI Friday’s private equity owner Electra told The Daily Mail that private equity played a “significant part” in a “very real oversupply situation” in the sector.
This was followed by further stress from the Covid-19 pandemic and subsequent cost of living crisis.
“These latest profits are a very encouraging sign. The health of the hospitality sector has been a concern since long before the pandemic and these figures show the recovery is well underway,” Peter Kubik, head of UHY Hacker Young, said.
Kubik said extensive closures and write-downs of loss-making outlets and staff redundancy programmes are all measures these major restaurants had to take to secure profit.
He added: “That restaurant groups have done as well as they have underscores the value of the restructuring many of them have undertaken in recent years.”