Tuesday 30 April 2019 4:00 pm | Updated: Monday 03 June 2019 12:10 am

China expansion and UK troubles take a slice out of earnings at Pizza Express

Pizza Express reported a slump in underlying earnings this morning, as expansion in China and tough trading conditions in the UK hit the group.

In the latest sign of distress within the casual dining sector, Pizza Express posted a 15.3 per cent fall in group earnings before interest, tax, depreciation and amortisation (Ebitda) to £80.2m during 2018.

The group announced revenue growth of 1.6 per cent to £543m in 2018 as it continued its expansion, which saw the pizza chain open 26 new restaurants over the course of the year.

The restaurant chain’s group chairman and chief executive Jinlong Wang blamed "sector-wide labour and property cost increases in the UK combined with more challenging conditions in some of our less mature international markets" for the drop in group Ebitda.

The comments come months after reports that vulture funds have been circling Pizza Express amid its struggles on the high street, as higher property and labour costs, along with weakened consumer spending, have hit the firm's UK balance sheet.

"Pizza Express’ full-year results area further proof that restaurant groups have to be absolutely on top of their game at all times if they are to survive and thrive," said Russ Mould, investment director at AJ Bell.

He told City PM: "Even though profits fell, the company continued to invest in new menus, to cater for all customers’ dietary needs, and service and technology so it could compete effectively with not only rival restaurateurs but the growing number of home-dining, delivery and meal-kit options available to hungry consumers."

He added: "That sort of competition has taken its toll on many casual dining groups and it is very easy for chains which are popular one day to quickly fall from grace, even if their standards do not drop and their prices still offer good value."