THE future of Pizza Hut is hanging in the balance as the family-favourite restaurant chain battles ongoing debt.

Heart with Smart Group, which operates all of Pizza Hut's 150 locations in the UK, is currently in negotiations to refinance millions of pounds of debt with lenders.

And auditors Pricewaterhouse Coopers (PwC) warned in accounts published on Friday that the dining franchise arm of the business faced “material uncertainty which may cast significant doubt about the…ability to continue as a going concern".

It comes as the company continues to grapple with high inflation.

PwC also said conditions for the restaurant sector "continued to be challenging" in 2022 following the coronavirus lockdowns.

Heart with Smart Group bosses have been forced to seek revised terms on its debt this year as soaring prices resulted in further losses.

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In the year to December 2022, Pizza Hut's revenues jumped from £130million to £161million – but costs soared even more, pushing it to a pre-tax loss of £3.6million.

The chain is currently in the process of repaying £73million worth of debt with £31million needing to be paid by April 2024.

Bosses warned it may yet breach its agreements in the final three months of this year in a “severe but plausible downside scenario”.

However, they added that they expect such a breach to be waived by lenders.

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It comes after Pizza Hut announced in 2020 that it would close 29 branches following its rescue from the brink of collapse.

The chain was saved from going bust after landlords agreed to reduce rents on restaurant branches.

At the time, the business ran over 200 locations and employed around 5,000 staff.

Following the publishing of the accounts, Jens Hofma, chief executive of Heart with Smart Group, said: "Our turnover rose 25% in 2022 and we remain optimistic given the demand for restaurant experience remains strong, energy prices are easing and productivity initiatives and investments are gaining momentum.

He added: "Our operating result of minus £3million for 2022 is marginal when you consider the impact of Omicron in the early part of the year, followed by utility bill rises and other cost pressures – many operators are facing similar or worse issues with profitability during this period. 

"Our current trading results demonstrate we are in strong recovery with fantastic momentum this summer, achieving double-digit sales growth."

It comes as a number of retailers struggle to keep stores open as consumers turn to online shopping.

High inflation means consumers are spending less too.

Wilko, Paperchase and Cath Kidston have all crashed into administration this year, closing hundreds of stores between them.

Wilko could yet be rescued though. A second fresh bid was put forward on Friday which could see all stores and jobs saved.

It's not all bad news though as some retailers have been opening stores, including B&M and Poundland.

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Future of Pizza Hut hangs in the balance as chain battles huge debt pile

Pizza Hut opened its first restaurant in Islington, London, in 1973.

During the 1980s the chain was opening an average of one restaurant each week in the UK.

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