The downturn in casual dining delivered another blow to Pizza Express in the first half of the year while newer rival Franco Manca hit the spot as its menu of sourdough pizzas, green cola and vegan cheese appealed to changing consumer appetites.
The contrasting fortunes were underlined as Pizza Express reported falling profits and put restaurant openings on hold, while Franco Manca attracted more customers and took advantage of falling rents to open more branches.
Pizza Express said underlying profits fell 7.7% to £32.4m in the six months to the end of June. The chain opened just two new branches over the period and said the focus would be on improving existing sites and revamping its menu.
Pizza Express’s chief executive, Jinlong Wang, said: “We are taking a measured approach to growing our business in the UK and Ireland … We are now planning to focus our capital investment on upgrading our existing estate rather than adding more sites.”
Pizza Express opened its first restaurant in 1965 and expanded in the 1990s to become a mainstay for families seeking an inexpensive meal out. The chain was bought by Hony Capital, a Chinese private equity firm, in 2014 when casual dining was booming in the UK.
However, the market for casual dining has struggled since 2016 after becoming overcrowded with chains that expanded too quickly. Rising rents, wages and ingredient costs squeezed margins, especially in the saturated Italian-themed market which has fallen in popularity.
Jamie Oliver’s Italian chain closed in May and Prezzo and Strada have shut branches amid a sector rout that prompted landlords to cut rents.
Franco Manca, founded in 2008 in Brixton, south London, has expanded while other chains struggled. Its owner, Fulham Shore, said the five restaurants that it opened in the first 21 weeks of its financial year were trading well and it was in talks to add more branches outside London.
“At Franco Manca, increased revenue is being driven by restaurant openings and increased customer numbers,” Fulham Shore’s chairman, David Page, said. “We continue to see more properties coming to the market at ever lower rents … and will continue to take advantage.”
Page was Pizza Express’ boss before it was sold to private equity groups in 2003 and co-founded Clapham House, whose chains included Gourmet Burger Kitchen, before selling to Nando’s in 2010. Fulham Shore, which also owns the Real Greek chain, bought Franco Manca in 2015.
Peter Martin, vice-president at the food and drink consultancy CGA, said: “In a very fast-moving, competitive market, consumers want something new and there is plenty of choice. Franco Manca has benefited from being different in that Italian space.”
