Restaurant chain closes 74 outlets nationwide in UK due to financial hardships
Papa John's, the popular pizza chain, has faced significant financial difficulties in the UK, leading to the closure of 74 of its takeaway outlets across the country. The closure, which took place over the course of a year and was confirmed today, has reduced the total number of UK branches from 524 to 457.
The last time Papa John's achieved a pre-tax profit in the UK was in 2021 with £8.1m. However, the UK arm of the company suffered pre-tax losses of £21.8million in the latest financial year, marking a 20.6% increase from the previous year.
The financial difficulties were partly due to a 2% decline in like-for-like system sales across the UK and Ireland. Additionally, turnover decreased by 7.6% to £88.7 million, largely driven by a drop in QCC (Quality Control Center) income following the reduction in the number of restaurants.
Despite these challenges, the UK division of Papa John's is expected to return to profitability in 2025, as per the company's forecasts. The focus is on stabilizing and improving existing operations to achieve profitability.
In an effort to optimize operations, Papa John's plans to increase investment in research and technology, such as better utilization of customer data. Furthermore, the company is looking at the development of new types of sites beyond traditional restaurants, such as expanding into holiday parks.
Papa John's has also opened seven new restaurants across the UK, despite closing underperforming stores. One such new branch was opened in Sleaford, Lincolnshire last March, creating 20 new jobs.
Chris Phylactou, managing director at Papa Johns UK, stated that their priority is to support the affected team members. No further information about the number of staff affected by the announcement was provided.
In a positive note, the Mayor of Sleaford, Councillor Anthony Brand, was present at the opening of the new Papa John's.
As Papa John's UK works towards financial recovery, it remains to be seen how these changes will impact the company's future in the UK market.
Mortgages could potentially be sought by employees affected by the closure of Papa John's outlets, as they may need to find alternative sources of income to support their lifestyles.
Investing in research and technology, such as customer data utilization, is a key strategy for Papa John's UK to optimize its operations and achieve profitability in the future.
As the company explores new types of sites like holiday parks for business expansion, the property market might see an increase in demand for such locations, potentially opening up new finance opportunities.
