The owner of high street Italian restaurant chains Ask Italian and Zizzi has confirmed it will close 75 branches, with up to 1,200 employees set to lose their jobs, as first reported by BBC News. The decision is the result of the company, Azzuri Group, being bought out of administration by American investment firm Tower Brook Capital Partners, in a £70 million deal that TBCP says will “protect 5,000 jobs.” Bridgepoint, the last private equity firm to buy the group, paid £250 million for Ask and Zizzi in 2015.
Azzuri Group chief executive Steve Holmes said the novel coronavirus crisis has had a “profound impact” on high street restaurant chiains, after the pandemic forced the closure of non-essential businesses at the end of March.
“The Covid-19 crisis has had a profound impact on the casual dining sector, bringing many businesses like ours to a standstill,” he said. “Despite being a successful operator, the immediate loss of revenue during lockdown meant that we have had to make some incredibly difficult decisions to protect the business for the long-term.”
Last month, The Restaurant Group announced the closure of 120 branches of the old-school Italian-American chain Frankie and Benny’s, risking 3,000 jobs. Later, the Casual Dining Group (CDG) said that 91 of its 250 restaurants in an attempt to make it a less wieldy proposition for a buyer. Of those 91, 31 of the once-influential French brasserie chain Café Rouge closed immediately. CDG’s decision put 2,000 jobs at risk.
Only last week, Pizza Express, one of Britain’s most recognisable restaurant chains signalled that it was in such significant debt that its sale would have wiped out its owner, Hony Capital. It too is expected to close restaurants if and when any deal is finalised.
While the crisis has left few in the hospitality industry unscathed, the high street restaurant groups across the nation, which are often owned by private equity firms or investment companies, were particularly vulnerable to such a fundamental interruption to business. For the last three years, through a combination of increased rent and business rate outgoings, rising food and labour costs, increased competition, and Brexit, their number and status was already diminished. Mass closures and job losses between 2017 and 2019 were referred to as the “casual dining crunch.” These restaurant groups, saddled with debts after each private equity acquisition, were already as fragile as a house of cards before the novel coronavirus pandemic shut business down, with the impact of that fragility hitting restaurant staff first, and not the owners who leveraged those debts.
However, one effect of the COVID-19 crisis is that there will be even more private equity money circulating around broken, beleaguered, once busy British restaurant chains. Another is that any future they have is dependent on them becoming smaller — and for thousands of workers to lose their jobs as a result.