Hony buys Pizza Express

Hony buys Pizza Express

(Photo credit: Flickr – david george)

The British restaurant chain Pizza Express has been sold to Hony Capital, a China-based private equity firm, in a deal worth £900 million or roughly 9 billion RMB. Transnational acquisitions are not rare, so this deal has only been glanced over by many mainstream media outlets, but the Pizza Express deal raises a number of important questions. Firstly, Hony Capital CEO John Zhao described the deal as an opportunity for Pizza Express to consolidate its presence in the Chinese market. Does this point to a continuing development of discerning, internationalised middle-class consumerism in China? Secondly, what implications will the deal have for the UK side of Pizza Express operations? For readers, perhaps the most important question is what price point the rapidly increasing number of Pizza Express restaurants will target.

Middle-class consumerism is not a new trend in China: Western brands such as Starbucks and Kentucky Fried Chicken arrived in China’s first tier cities in the 1990s and have since also established a presence in many second and third tier cities. The rise of consumerism has also been driven by Chinese firms: among other big players, CapitaMall franchise has established 62 malls across 37 cities throughout China. Many of these malls play host to Western food and beverage brands, from the aforementioned Starbucks and KFC to Costa and McDonalds. While these chains have all been highly successful, they are all either fast food or coffee shops that do not provide table service. Pizza Hut, arguably the most successful western full-service restaurant to operate in China, does not pretend to be an upmarket, or even mid-market choice. Up to now, there has been a continuing absence of established middle-class restaurant brands from the growing roster of Western food and beverage brands plying their trade in China. Pizza Express has filled this void.

It is telling that Hony Capital has only finalised its purchase of Pizza Express after the restaurant chain had already made inroads into the Chinese market, opening 22 branches in Hong Kong, Shanghai and most recently in Beijing, where the restaurant used to operate under the Pizza Marzano brand, which is used at many overseas Pizza Express restaurants and has been translated as mashang nuo or “agree right away”. Where once the opening of a KFC restaurant would become the talk of the town, the success of the Pizza Express outlets in Shanghai and Beijing in particular played a key role in encouraging John Zhao to shell out £900 billion on the chain, a sure indication of his belief that there is a bright future for it both in the UK and in its expansion into the Chinese market, where it will surely prove a hit among middle-class consumers who have moved on from the likes of Pizza Hut and KFC.

While its purchase by Hony will likely ease Pizza Express’s expansion in the Chinese market, the acquisition is also part of a growing trend of the takeover of big-name British brands by Chinese holding companies. In April of this year, Nanjing-based Sanpower bought UK department store House of Fraser in a £480 million deal. Similar to Pizza Express’s announcement of a “Peking Duck” pizza in its Greater China resaurants, Sanpower took steps to localise the House of Fraser brand by announcing an “Oriental Fraser” that will open in Nanjing in 2015.

The trend in Chinese takeovers creates more choice for middle-class Chinese restaurant goers, but it is unlikely to have ramifications for the culinary experience of their British counterparts. Journalists such as Evan Osnos have written about the commodification in China of Western images (Osnos wrote about this trend in reference to mass-market beer Pabst Blue Ribbon for the New Yorker). As long as the image of Western-ness remains popular, UK consumers need not fear any changes to their menu. Unfortunately for consumers in China, were average earnings even in Beijing and Shanghai are £5000 behind the UK average, prices at Pizza Express outlets in China look unlikely to change. Users of the Shanghai section of Dianping, a restaurant review website, posted that on average they paid 130 RMB per head, similar to what one would pay in the UK for a main dish and a drink. But while prices may prove too high, there will be plenty of consumers in China, both foreign and local, who will mashang nuo.

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