Pizza Express
Pizza ExpressAFP / Getty Images

The like-for-like sales of Pizza Express have returned to positive in the financial year ending 2014, after three years of negative sales, but future price increases may be difficult, Moody's Investors Service said after rating the company for the first time.

"Whilst this ability to increase prices to be a reflection of the underlying strength of the concept and brand, Moody's considers future price increases to be more limited, particularly in the event of a further economic downturn," according to a Moody's note.

Moody's has assigned a corporate family rating of B3 to Twinkle Pizza Holdings, the holding company of Pizza Express group of companies, with stable outlook.

Moody's said it sees the UK economic recovery to be consumer-driven, and therefore expects the company's recent positive trading trend to continue at least for the short term.

The rating agency noted that Pizza Express has grown to become a strong and trusted brand since it was established in 1965, more recently enhanced by the products sold through major retail chains.

"In comparison to its main branded competitors, Pizza Express has a very focused offering but is therefore able to operate at the lower end of the pricing scale," the rating agency said.

It is the leading player in the casual dining segment of the restaurant market with 433 sites in the UK and Ireland, a high proportion of which are relatively new or recently refurbished.

In addition, Moody's has assigned a (P)B2 rating to the new GBP410mn senior secured notes due 2021 and a (P)Caa1 rating to the new GBP200mn senior notes due 2022, to be issued by Twinkle Pizza Holdings. The outlook on all ratings is stable.

Pizza Express's rating reflects its highly levered capital structure, sensitivity to the underlying economy and consumer spending and competitive market. But these negatives are partially offset by its strong brand recognition in its core UK market, extensive presence on the high street and competitive operating model, Moody's said.