Italian restaurant chain Prezzo could close around 100 restaurants, putting hundreds of jobs at risk as the company looks set to become the latest victim of brutal trading conditions.
Prezzo’s owner, private equity firm TPG Capital, is expected to put the chain into a Company Voluntary Arrangement in the next few days, according to the Press Asociation. A CVA is a deal with the creditors of a struggling company that allows it to reduce its debt but keep running.
Under the deal, the company will close unprofitable branches and secure rent reductions on the remaining estate. Should the company put forward a CVA, its creditors would need to approve the proposal before it could go ahead.
Prezzo employs around 4,500 people and has 300 restaurants. Under the deal it is thought that a third of those will close, along with outlets of Chimichanga, the Tex-Mex brand owned by Prezzo.
The news comes as retailers and restaurant chains struggle against higher wage bills thanks to a rising minimum wage, falling footfall and increasing rates.
On Wednesday, Toys ‘R’ Us and electronics retailer Maplin became the latest firms to fall into administration, putting more than 5,000 jobs at risk.
Casual dining restaurants and fashion retailers have come under particular strain as consumers cut back on discretionary spending amid falling real wages. Jamie’s Italian and burger chain Byron entered CVAs in recent weeks.
Firms have also been hit by rising business rates as well as the fall in the value of the pound.
Thousands of workers have been laid off by big chains since the turn of the year, with Debenhams, Marks & Spencer, Tesco, Sainsbury’s, Asda, Morrisons and B&Q all setting out plans to shed staff.
More job losses look set to follow. Furniture retailer Warren Evans fell into administration this month, New Look and Mothercare both made dire recent announcements to the stock market and House of Fraser has entered negotiations to cut its store rents.
Almost one in five fashion retailers are exhibiting early warning signs of becoming insolvent, according to research published earlier this month by professional services firm Moore Stephens.