UK Pizza Hut to raise funds after Budget tax hikes

Heart With Smart operates all 140 UK dine-in Pizza Hut restaurants

The operator of Pizza Hut's restaurants in the UK is looking to raise more than £10m to help it cope with increased costs after tax rises on business were announced in last month's Budget.

The money could come from a sale of part of the business, or new investment from existing shareholders.

It comes amid growing backlash from business owners who warn rises in employers' national insurance contributions and the National Living Wage will push up costs for business which employ lots of low-wage workers.

Heart With Smart (HWS) - which operates all 140 UK dine-in Pizza Hut restaurants - will use the money on new technology including touch-screen ordering kiosks and contactless table ordering.

The new features would allow restaurants to save money by operating with fewer staff and are already being trialled successfully in some Pizza Hut outlets, a company insider told the BBC.

They said it would result in reduced staff levels, but the store does not expect a major redundancy programme.

From April 2025 the rate of employers’ national insurance contributions, which are paid by businesses on top of workers’ salaries, will rise from 13.8% to 15%, and the level where contributions start will fall to £5,000.

Combined with a 6.7% increase in the National Living Wage and an even bigger rise for 18 to 20-year-olds, HWS expects to see its labour costs rise £4m, or about 14%, next year.

Chancellor Rachel Reeves has previously said businesses "will have to absorb" some of these costs through their profits.

In a letter with over 200 signatories, hospitality bosses last week told the chancellor the industry was disproportionately impacted by the "unsustainable" tax hike.

They warned this would "unquestionably" cause closures and job losses.

A number of businesses, including Sainsbury's, M&S, BT, Wetherspoons, Fullers and JD Sports have also hinted or warned that they may have to pass some of those extra costs on to customers by increasing prices.

But HWS feels it has limited ability to do this as customers may not accept higher prices, the insider told the BBC.

They said that the decision to raise the extra money is not just the result of Budget measures introduced last month.

It is the effect of the changes on top of five difficult years for the restaurant business, following the pandemic, the cost-of-living crisis and labour costs which are already rising.

The advisory firm Interpath has been hired to run the fundraising process, which was first reported by Sky News. Interpath has declined to comment.

Asked about the impact of its tax rises on businesses, a government spokesperson said it "had to make difficult choices... to restore desperately needed economic stability".