Pizza Hut Restaurants UK operator seeks buyer amid Budget tax hike: Pizza Hut's biggest UK franchisee has begun approaching potential bidders as it scrambles to mitigate the looming impact of tax hikes announced in last month's Budget. Heart With Smart (HWS), which operates 146 Pizza Hut dine-in restaurants, has instructed advisers to find a buyer or raise tens of millions of pounds in external funding, reports Sky News. City sources said the process, which is being handled by Interpath Advisory, had got under way in recent days and was expected to result in a transaction taking place in the next few months. HWS, which was previously called Pizza Hut Restaurants, employs about 3,000 people, and is owned by a combination of Pricoa and the company's management, led by chief executive Jens Hofma. They led a management buyout reportedly worth £100m in 2018, with the business having previously owned by private equity firm Rutland Partners. One source suggested that as well as the talks with external third parties, it remained possible that a financing solution could be reached with its existing backers. Insiders suggested that the increases to the national living wage and employers' national insurance contributions unveiled by chancellor Rachel Reeves would add approximately £4m to HWS’ annual costs – equivalent to more than half of last year's Ebitda. One added that the Pizza Hut restaurants' operation needed additional funding to mitigate the impact of the Budget and put the business on a sustainable financial footing. The consequences of a failure to find a buyer or new investment were unclear today (Saturday, 16 November), although the emergence of the process comes amid increasingly bleak warnings from across the hospitality industry. Last weekend, a letter co-ordinated by UKHospitality and signed by scores of industry bosses – including Hofma – told the chancellor that left unaddressed, her Budget tax hikes would result in job losses and business closures within a year. The letter also said that the scope for pubs and restaurants to pass on the tax rises in the form of higher prices was limited because of weaker consumer spending power. HWS operates all of Pizza Hut's dine-in restaurants in Britain, but has no involvement with its large number of delivery outlets, which are run by individual franchisees. Accounts for HWS for the year to 3 December 2023 show it completed a restructuring of its debt under which its lenders agreed to suspend repayments of some of its borrowings until November next year. The terms of the same facilities were also extended to September 2027, while it also signed a new ten-year Pizza Hut franchise agreement with Yum Brands which expires in 2032. Total turnover decreased 1.5% to £159,029,000, while its pre-tax loss stood at £15,928,000 (2022: loss of £16,481,000). The overall profit for the financial period was £1,657,000 (2022: £168,000). The cash position of the company was £4,084,000 at the balance sheet date (2022: £9,270,000). Pizza Hut opened its first UK restaurant in the early 1970s and expanded rapidly over the following 15 years. In 2020, the company announced it was closing dozens of restaurants, with the loss of hundreds of jobs, through a company voluntary arrangement. At that time, it operated more than 240 sites across the UK. HWS and Interpath declined to comment. Pizza Hut Restaurants UK features in the Premium Club Turnover & Profits Blue Book, the latest edition of which was made available exclusively to Premium Club members yesterday (Friday, 15 November) and features 1,110 companies. Pizza Hut Restaurants UK’s turnover of £159,029,000 is the 75th highest in the database. Companies can now have an unlimited number of people receive access to Propel Premium for a year for £995 plus VAT – whether they are an operator or a supplier. The single subscription rate is £495 plus VAT for operators and £595 plus VAT for suppliers. Email kai.kirkman@propelinfo.com to upgrade your subscription.