A discussion with: Colin Elliot, PizzaExpress CFO

1. Tell us about your current role and experience

My name is Colin Elliot and I am the CFO of Pizza Express. As soon as I qualified as a chartered accountant I moved into investment banking, where I stayed for about 10 years, before returning to finance.  I became a CFO in 2002 when I was appointed as the CFO of a small PE backed healthcare business running thirty odd care facilities across the UK.  Since then, I have been the CFO of a series of companies across the Hospitality and Retail sectors where Real Estate has played a significant role in engaging with customers - Premier Inn and House of Fraser amongst them.

2. What is your approach to the ownership structure of your restaurants?

We operate a fully leasehold portfolio.  We want to run the business on a capital light basis, and need the flexibility of shorter term leases (typically 15 years with breaks at year 6 and 11) to be able to adapt to the changing demands of customers.  Leasing also imposes financial discipline to ensure restaurants are performing at a level to justify their resource allocation, and it's therefore important that the inherent cost of capital associated with occupation is factored into decision making. In addition, the nature of the locations, say as part of a shopping centre, do not allow for fractional ownership, thus limiting options in some key markets where we trade.

3. If you were advising another CFO looking at their ownership structure, would you have an owned, leased or mixed portfolio given the choice?

It depends on the business!

Real estate should first and foremost support the operational needs of any business - the tail doesn't wag the dog.  Think about how critical a piece of real estate is to your business or how much flexibility you need to adapt to future changes in your landscape. This will indicate the ownership structure that is best for each piece of real estate.  

Secondly, think also about your overall capital structure; it's not always just about cost - a tiered structure using different types of capital with a range of maturities can mitigate the burden and risk of frequent refinancing.  

Thirdly, I would be thinking about cashflow - do I want to have cash tied up in real estate when it could be used to invest in other more productive areas.  Finally, I would need to know what the market will let me do - are there landlord investors out there who can deliver what I need operationally or do I need to do it myself.

4. What key lesson have you learned?

Take proper advice. In my roles, I have covered a wide variety of sectors and geographies - my experience can translate across them all but I understand when to lean on sector specialists to support my needs - be it AI, Real Estate, social trends or other areas. Success is delivered by the most effective team.

5. What's your go to on the menu?

Ha Ha, although pizza is the heart of our business, I love our pasta and salad options, all of which are delicious, so tend to choose one of them; washed down with Peroni's new alcohol free lemon beer which is great.