Like-for-like sales growth at PizzaExpress has slowed to 2%, with a 0% rise seen in London. Falling tourist numbers hit outlets in the capital, but further afield the picture was better. Sales continue to rise, albeit not as strongly as before. The company believes that customers will trade down from expensive meals to using its restaurants. While this is unsubstantiated, and growth is likely to stay slower, PizzaExpress' prospects still look good.

UK restaurant chain PizzaExpress said at its AGM that the drop in tourists has hit growth in its London pizza restaurants, which account for half of the 280-strong chain. Like-for-like sales growth averaged 2%, but this divided into two: 6% growth outside Greater London and 0% within. This is a sharp drop from the year ended June 30, when the company experienced sales growth of 10%, although part of the decline is explained by a stronger comparable period last year.

Despite the disappointing figures, PizzaExpress was still enthusiastic about its prospects. CEO David Page said the company viewed a potential slowdown as an opportunity, bringing cheaper rents and building costs, and attracting customers from more expensive restaurants.

The company has made no changes to its aggressive expansion plans. It has put GBP21 million aside to set up 50 more outlets in the UK and abroad and there seems to be little need to scale back. The underlying business looks sound, even though its international operations continue to make a loss as the company buys back its franchises.

PizzaExpress' low risk strategy of entering new markets through franchises and buying them if they are a success minimizes costs and reduces the embarrassment of having to withdraw from unsuccessful regions, such as Egypt. Countries such as Spain and France have provided an encouraging reception for the chain, and look to be worthwhile focuses for PizzaExpress' continued attention.

It's possible that the trend towards 'fast casual' food being observed in the US will rub off in Europe, which could advance PizzaExpress' theory. But even if not, there is good reason to believe the company could continue to do comparatively well. It is about to launch its first advertising campaign, which should bring in more new customers. Growth is unlikely to reach June's heights, however.

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