Activities

Prezzo owns and operates a chain of rustic Italian pizza and pasta restaurants across southern England, of which most are under the Prezzo brand and two under the Jonathan’s name.

The AIM-listed company currently operates three other brands as well. It opened its first Mexican-style eatery, Chimichanga, in 2004 and opened its first Ultimate Burger and iMMo Café outlets in 2005. 

Timeline

• 2000: In November, Jonathan Kaye opens his first restaurant, a Jonathan’s in New Oxford Street, London, with backing from his uncle Phillip Kaye, who founded the Ask Central pizza chain and acts as a consultant to Prezzo. The brand grows to four outlets, but two are later converted into Prezzos.
• 2001: The first Prezzo opens in December.
• 2002: In March, the four-strong Prezzo group floats on the Alternative Investment Market, raising £1.5m to fund expansion. The group raises another £2.5m in June and £2.7m in November. By the end of the year, it has almost quadrupled in size to 15 restaurants.
• 2003: Prezzo raises a further £5.8m for expansion, and opens 11 new restaurants, bringing the total to 26.
• 2004: The group raises another £9.3m and opens 20 new restaurants, including its first Chimichanga.
• February 2005: Prezzo trials a new concept, Ultimate Burger, at its old headquarters in New Oxford Street. By July, it has three outlets in London and one in Middlesex.
• November 2005: Prezzo opens its first iMMO cafe in Dorking, in Surrey, followed a month later by a second branch in Stanmore, Middlesex.
• February 2006: Prezzo raises £7.5m to fund further expansion after placing 12.5 million shares at 60p apiece.
  

Financial snapshot

Full Year

Turnover: £37.4m (2005: £22.4m)
Pre-tax profit: £6.4m (2005: £4.1m) 

Half Year:

Turnover: £ 15.9m (2004: £9.1m) 
Pre-tax profit: £2.3m (2004: £1.34m)

Financial year end: 1 January 2006
Half year-end: 3 July 2005

Operating data

Number of restaurants: 78, including 57 Prezzos, two Jonathan’s, seven Chimichangas, four Ultimate Burgers and two iMMO cafés

Number of employees: more than 400

Payroll as a percentage of turnover: 31%

Prezzo restaurants are spread across the southern part of England, with sites in London, Berkshire, Buckinghamshire, Cambridgeshire, Dorset, Essex, Gloucestershire, Hampshire, Hertfordshire, Middlesex, Norfolk, Suffolk, Surrey and Wiltshire.

Chimichanga restaurants are sited in Braintree, Essex; Worcester;  Ipswich; and Canary Riverside, East London.

Jonathan’s restaurants are located in Maidenhead, Berkshire and in Stanmore, Middlesex.

Ultimate Burger restaurants are sited in London (three outlets) and Stanmore, Middlesex.

iMMO cafés are located in Dorking, Surrey, and in Stanmore, Middlesex

Strategy

“During the year a further 24 restaurants were opened, increasing our total to 72 by the year end. The freehold interests in three properties were sold and the resulting profits have been included with the rebranding and provision for disposal costs of those branches which failed to meet our expectations.

Since the year end we have opened a further 6 restaurants with all expansion being funded by the company's own resources. In February of this year the company raised £7.125 million which, together with the funds generated from operations, should be sufficient to meet our anticipated expenditure needs.

Current trading is in line with management expectations and the Directors view the future trading of the Company with confidence. At present we are operating 78 restaurants, currently fitting out a further 6 and have more openings planned."

Source: preliminary results statement, 12 April 2006

Chief executive

Jonathan Kaye

Key directors

Chairman: Michael Carlton
Operations director: Kuldip Sehmi
Non-executive director: John Lederer

Contact

Johnston House
8 Johnston Road
Woodford Green
Essex
IG8 0XA

Tel: 0845 602 3257

Website: http://www.prezzoplc.co.uk

Commentary

In September 2002, chairman Michael Carlton said Prezzo was looking to emulate the success of the Ask Central group of pizza and pasta restaurants, founded by Jonathan Kaye’s uncle Phillip and headed by his cousins Adam and Sam.

It has certainly followed the Ask template of meteoric expansion. Carlton’s comment was made just six months after the group floated on the Alternative Investment Market with four restaurants. By the end of that year, the group had grown to 15 restaurants, and it went on to open another 11 in 2003 and 24 more in 2004. It started the early months of 2005 with 50 sites under its belt.

And there are no signs that the rate of openings will slacken. As Jonathan Kaye observes: “Once you are on the stock market, you have to continue the way you began. No-one wants to invest in a company without growth.”

Investors can expect to see the group grow by around 15 restaurants a year. Kaye has sensibly decided to focus on Prezzo rather than Jonathan’s, to avoid diluting brand loyalty. Both serve pizza and pasta, but Prezzo offers a broader wine list and a wider menu that includes rotisserie chicken.

If the Chimichanga restaurants perform well, more will follow. While there will be no new Jonathan’s, Kaye is open to the idea of introducing new brands and added the Ultimate Burger concept in early February. 

The Prezzo brand has spread out from London as far north as Gloucestershire and Norfolk, and Kaye will be looking for suitable sites in the Midlands as a springboard to march on up into Scotland. The group is targeting premises of at least 2,500 sq ft that can hold a minimum of 75 seats – the group average is 95 seats.