John Williams, Chair of Cardiff General Unite the Union (personal capacity) and hospitality worker
Pizza Hut, for the second time this year, has gone into administration. Half of its UK restaurants could close, cutting 1,200 jobs.
The cost of eating out has increased by 5% in the past year, with a 6% decrease in people eating out. Inflation is the highest since April.
Are Pizza Hut’s problems down to people’s changing eating habits? One Pizza Hut managing director blames app costs.
But these factors do not explain Pizza Hut’s collapse. They merely explain why it made £3 million profit this year, instead of £10 million.
The real story of Pizza Hut recently is a business being passed between private equity firms, funded with short-term, high-risk credit. Pizza Hut is owned by YUM! with an annual income of $1.5 billion! The restaurants are now run by Directional Capital, an equity firm.
It is a travesty that Pizza Hut is being asset stripped, with massive job losses, simply because the return on investment is not high enough, quick enough. There is no reason for it to close.
Workers’ livelihoods are more important than risky creditors. These closures and job losses have to be fought.
This is part of a wider crisis in hospitality. In August, UK Hospitality reported that half of the job losses since Labour’s last Budget (89,000) have been in hospitality. That’s estimated to be more than 100,000 by November.
That’s 1 in 20 jobs across the sector gone. 33% of businesses are cutting opening hours. One in eight are closing sites. 60% have cut staff. We haven’t seen anything like this since Covid.
Many bosses complain that the increases in the minimum wage and National Insurance (NI) have hit their pockets. The trade unions should demand that the bosses ‘open the books’ to trade union inspection. Show the workers what has happened to all the profits generated by our contribution.
With Pizza Hut, the Labour government should step in. The Socialist Party argues for state subsidies, where genuinely needed, for socially useful small businesses.
But big companies should be taken into public ownership, and decisions made by the workers, trade unions, and the local community. Pizza Hut restaurant sites could be preserved, for example, and improved. But if particular sites are not needed, councils should guarantee alternative well-paid useful work, and take over the buildings to run them as local community resources.
