The owner of Zizzi and ASK Italian restaurant chains has reported widened annual losses despite cheering higher sales.
Azzurri Group, which also runs the Coco di Mama food-to-go chain, revealed that pre-tax losses widened to £16.4 million for the year to July 2 2023 – more than triple the £4.2 million losses seen the previous year.
But it notched up a 9% rise in total turnover to £257.8 million, although it did not provide like-for-like figures.
The widened losses follow a hit from rising interest payments on debts after interest rates were hiked over the year, as well as increased investment in the business.
Azzurri said that underlying earnings before interest, tax and exceptional items lifted 21% to £14.3 million, when stripping out the prior year’s boost from the temporary VAT reduction.
Azzurri, which acquired Irish-based Mexican restaurant chain Boojum last June, added that Christmas trading since its year-end had been “exceptional”, with like-for-like sales growth in the “mid-teens”.
It forecast “strong” revenue growth and underlying profitability in the current financial year.
Azzurri said: “The positive trading momentum has continued into the current year with an exceptional performance over the Christmas period.
“Overall, we remain confident of delivering another year of revenue and profit growth.”
The firm said it invested £22.2 million in its restaurants and stores, as well as technology systems and a push to boost Coco di Mama into a national delivery brand.
Its annual accounts also showed that the number of employees lifted across its more than 230 restaurants and shops, as well as administration teams, by over 740 to 5,693 in 2022/23.
Stephen Holmes, chief executive of Azzurri Group, said: “2023 has been a strong year for Azzurri with growth in revenues and VAT-adjusted profits.
“Key to this performance has been our continued investment in our restaurants and stores, the development of sector-leading technology to optimise our offer, the transformation of Coco di Mama into a national delivery brand and a relentless focus on efficiency to protect our value proposition.
“The current year has started well with a particularly strong Christmas.”
The results come after recent reports suggest Azzurri’s private equity owners Towerbrook Capital Partners are looking to put the restaurant business up for sale.
It was reported in December that Towerbrook had begun talks with investment bankers about putting it up for sale in 2024.
But on Monday, the group said only that “there is no sale process at the moment”.
Azzurri’s annual accounts show it was able to offset rising costs across the hospitality sector, with food and drink inflation of 1.8% in 2022/23, against over 15% in the wider market.
This was thanks to a raft of measures, such as menu changes, efficiency savings and contract renegotiation.
Azzurri was rescued by Towerbrook in 2020 in a pre-pack administration deal, after the group collapsed into insolvency.
The deal secured the future of 225 restaurants and shops, protecting 5,000 jobs.
Azzurri had previously been owned by fellow private equity firm Bridgepoint.