UK Pizza Hut Operator Seeks Over £10m Amid Tax Hikes and Rising Costs
The operator of Pizza Hut’s dine-in restaurants across the UK, Heart With Smart (HWS), is looking to raise over £10 million to counter the financial strain caused by recent tax increases announced in last month’s Budget. The funds may come from a partial sale of the business or new investments from existing shareholders.
The move follows widespread criticism from business owners over the rise in employers’ National Insurance contributions and the National Living Wage, which they say disproportionately impacts industries reliant on low-wage workers.
Modernisation to Mitigate Costs
HWS plans to channel the funds into upgrading its technology, including the installation of touch-screen ordering kiosks and contactless table service systems. These innovations, already being tested in some outlets, are expected to help the business save costs by reducing staffing requirements.
A company insider revealed to the BBC that while staff reductions are anticipated, a significant redundancy programme is not planned.
Soaring Costs and Industry Backlash
From April 2025, the employer’s National Insurance contribution rate will increase from 13.8% to 15%, with the threshold for contributions falling to £5,000. Coupled with a 6.7% hike in the National Living Wage and larger increases for younger workers, HWS estimates its labour costs will rise by £4 million, or approximately 14%, next year.
The hospitality sector, already grappling with the effects of the pandemic and the cost-of-living crisis, has voiced its frustration. Over 200 industry leaders recently signed a letter to Chancellor Rachel Reeves, warning that the tax hikes are “unsustainable” and could lead to closures and job losses.
Despite these challenges, HWS is cautious about raising menu prices, fearing customer pushback amid economic pressures.
Long-Term Struggles
The financial strain is not solely linked to the recent Budget. HWS has endured a challenging five years marked by the pandemic, rising operational costs, and labour shortages.
Interpath, an advisory firm, has been engaged to oversee the fundraising process, but it has declined to comment on the developments.
Government Stance
Defending the tax increases, a government spokesperson stated that “difficult choices” were necessary to stabilise the economy.
While other major businesses like Sainsbury’s, M&S, and JD Sports have hinted at passing on additional costs to consumers, HWS’s strategy reflects the ongoing pressure faced by the hospitality sector to balance innovation, customer retention, and rising costs.
