Pizza Hut’s UK Operator Seeks £10m Funding Amid Rising Business Costs
Heart With Smart (HWS), the operator of 140 UK Pizza Hut dine-in restaurants, is looking to raise more than £10 million to address increasing business expenses. The funding could come from a partial business sale or new investment from existing shareholders.
The move comes amid growing concerns from business owners about recent tax changes and wage increases that significantly impact companies employing low-wage workers. From April 2025, employers’ national insurance contributions will rise from 13.8% to 15%, with the contribution threshold lowering to £5,000.
Simultaneously, the National Living Wage is set to increase by 6.7%, with an even larger rise for workers aged 18-20. HWS anticipates its labor costs will increase by approximately £4 million, or 14%, in the next year. Chancellor Rachel Reeves has suggested that businesses should absorb some of these additional costs through their profits.
To mitigate rising expenses, HWS plans to implement new technological solutions, including touch-screen ordering kiosks and contactless table ordering. These innovations are expected to reduce staffing requirements, though the company does not anticipate a major redundancy program.
The hospitality industry has strongly criticized these financial pressures. Over 200 industry leaders signed a letter to the chancellor warning that the tax increases are “unsustainable” and could lead to business closures and job losses. Several major companies, including Sainsbury’s, M&S, BT, Wetherspoons, Fullers, and JD Sports, have indicated they might need to pass these extra costs to consumers through price increases.
However, HWS believes it has limited ability to raise prices, fearing customers may not accept higher costs. The fundraising decision stems from cumulative challenges faced by the restaurant industry over the past five years, including the pandemic, cost-of-living crisis, and ongoing labor cost increases.
The advisory firm Interpath has been engaged to manage the fundraising process. Both Interpath and the Treasury have been approached for comment but have not yet responded.
This situation highlights the broader economic challenges facing UK businesses, particularly in the hospitality sector. The combination of increased tax contributions, rising wages, and ongoing economic uncertainties is creating significant financial pressure for companies like Pizza Hut’s UK operator.
The proposed technological investments represent a strategic response to these challenges, aiming to reduce operational costs while maintaining service quality. However, the need to raise additional funding underscores the complex financial landscape businesses currently navigate.
As businesses continue to adapt to changing economic conditions, the strategies employed by HWS may provide insights into how other companies might approach similar challenges in the coming years.
