UK Pizza Hut Operator Seeks Over £10 Million Funding Amid Budget Tax Increases

The entity managing Pizza Hut’s restaurants across the UK aims to secure more than £10 million. This initiative is intended to help the business manage increased expenses following the tax adjustments for companies announced in the previous month’s Budget. These funds could be generated through the sale of a portion of the business or by attracting new investment from existing shareholders. This development unfolds amidst growing opposition from business proprietors, who caution that increases in employers’ national insurance contributions and the National Living Wage will elevate operational costs for companies that employ a substantial number of low-wage workers. Heart With Smart (HWS), which oversees all 140 dine-in Pizza Hut restaurants in the UK, plans to invest the money in new technology, including touch-screen ordering kiosks and contactless table ordering systems. A company insider informed the BBC that these new functionalities would enable restaurants to save money by operating with fewer staff members and are already being successfully piloted in some Pizza Hut locations. The insider stated that while this would lead to reduced staff levels, the company does not anticipate implementing a major redundancy programme. Effective April 2025, the rate of employers’ national insurance contributions, which businesses pay in addition to workers’ salaries, is scheduled to increase from 13.8% to 15%. Additionally, the income threshold at which these contributions begin will decrease to £5,000. Coupled with a 6.7% rise in the National Living Wage and an even larger increase for employees aged 18 to 20, HWS projects its labour costs to climb by £4 million, or approximately 14%, in the upcoming year. Chancellor Rachel Reeves has previously commented that businesses “will have to absorb” some of these costs through their profits. Last week, in a letter signed by over 200 individuals, hospitality leaders communicated to the chancellor that the industry was disproportionately affected by the “unsustainable” tax hike. They warned that this would “unquestionably” lead to business closures and job losses. A number of companies, including Sainsbury’s, M&S, BT, Wetherspoons, Fullers, and JD Sports, have also indicated or stated that they might need to transfer some of these additional expenses to customers by raising prices. However, the insider told the BBC that HWS believes its capacity to do this is limited, as customers may not accept higher prices. They further explained that the decision to raise the additional capital is not solely a result of the Budget measures introduced last month. Instead, it represents the cumulative effect of these changes on top of five challenging years for the restaurant sector, following the pandemic, the cost-of-living crisis, and already escalating labour costs. The advisory firm Interpath has been appointed to manage the fundraising process, a development first reported by Sky News. Interpath has declined to comment. When asked about the impact of its tax increases on businesses, a government spokesperson stated that it “had to make difficult choices… to restore desperately needed economic stability”. Copyright 2024 BBC. All rights reserved. The BBC does not assume responsibility for the content found on external sites. Further details on its approach to external linking are available.