Heart With Smart (HWS), the largest UK franchisee of Pizza Hut, is in advanced discussions with potential bidders for a significant stake in the business, as reported by Sky News.
It aims to select a bidder in January 2024 after talks with interested parties.
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HWS is working with Interpath Advisory on the process.
It has not provided any comments on the ongoing sale process.
HWS operates 140 Pizza Hut dine-in restaurants in the UK and employs 3,000 people.
The company’s management, led by chief executive officer Jens Hofma, and Pricoa Capital Group jointly own HWS.
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By GlobalDataThe two entities acquired the business in 2028 in a management buyout valued at £100m ($125m) from Rutland Partners.
The present sale process was initiated as HWS faces mounting costs due to tax hikes and increases to the national living wage and employers’ national insurance contributions unveiled in the Uk government’s October budget.
These changes are expected to add £4m to HWS’s annual expenses, significantly impacting its profitability.
The casual dining sector in Britain, in which HWS is a major player, was under considerable strain even before the budget announcement, with TGI Fridays going into administration and subsequently being sold to a consortium of Breal Capital and Calveton.
HWS’s latest accounts, filed at Companies House for the period from 5 December 2022 to 3 December 2023, reveal a debt restructuring agreement with lenders, including suspended repayments until November 2026 and extended facility terms to September 2027.
HWS has also secured a new ten-year franchise agreement with Yum Brands that will last until 2032.
The accounts stated: “Whilst market conditions have improved noticeably since 2022, consumers remain challenged by higher-than-average levels of inflation, high mortgage costs and slow growth in the economy,”
It added: “The costs of business remain challenging.”
Pizza Hut opened its first restaurant in the early 1970s.
However, the brand faced closures and job losses through a company voluntary arrangement (CVA) in 2020.
At present, HWS operates all dine-in outlets but does not manage the delivery service segment.
