UK casual dining squeeze bites Pizza Express

The China-owned Pizza Express restaurant chain has revealed that its pre-tax losses almost doubled last year, as it suffers from a squeeze on the United Kingdom casual dining sector.

Pizza Express, which is owned by private equity company Hony Capital, reported this week that pre-tax losses rose from 28.7 million pounds ($36.4 million) in 2017 to 55 million pounds last year.

International sales were also down 7.5 percent last year. Chief Executive Wang Jinlong said that the company now plans to slow its expansion in China, where two new branches were added last year bringing the total to 24.

"There were undoubtedly some challenges in our international markets in 2018," said Wang, adding that the Chinese mainland was particularly impacted as more competitors entered the market and the pace of innovation of local brands exceeded Pizza Express'.

"In this context we have taken a measured and prudent approach to expansion in the short term," he said.

Wang said that the company is working on changes to its menu in China and will also adjust its operational and marketing strategy.

He said that importantly, the company's long-term plans in the Chinese mainland remain unchanged, as does their confidence in the future growth in the market.

British entrepreneur Peter Boizot opened the first Pizza Express restaurant in Soho, central London, in 1965. The company began rapidly expanding in the 1990s, and today there are now more than 430 branches in the UK and Ireland and a total of 627 worldwide. The chain was sold to Hony Capital in 2014 in a 900 million-pound deal.

Pizza Express is regarded as a market leader in British casual dining, but the company has suffered alongside its competitors during an industry-wide slump brought on by rising wages and property costs.

A number of restaurant chains have endured crushing losses and closed sites in the UK, including Prezzo, Gourmet Burger Kitchen, Carluccio's, Gaucho, Byron and Jaime's Italian, which was founded by celebrity chef Jamie Oliver.

Carluccio's shut 30 of its 70 locations last year and this May, Jamie's Italian went into administration and closed 22 of its 25 sites, resulting in more than  1,000 lost jobs.

Wang also said that snowy conditions in the first half of the year followed by an unusually hot summer impacted sales in the UK in 2018, which were down by 0.9 percent.

"There have of course also been a number of challenges, from those that were unforeseen — such as the extreme weather experienced across the year in the UK and Ireland — to those that we were expecting, for example the labor and property cost pressures in the UK or the intensifying competition in China that we knew would impact us," he said.

Wang added that the casual dining landscape in the UK "remains highly competitive and we recognize the critical need to innovate".

The restaurant recently launched a fully vegan menu to keep pace with British diet trends, as well as whole meal dough pizzas and reduced sugar and salt options.