Troubling times in Hell

Hell Pizza denied allegations of

A series of overseas store closures has "damaged" fast-food giant Hell Pizza, says its founding director.

Staff at five stores in Queensland turned up for work last month to find they had been locked out. A sixth store due to open will not do so.

The problems in Australia came soon after the company closed its outlet in the upmarket London suburb of Fulham, the first overseas branch opened in 2007.

The revelations come as Hell:

Confirmed it had shelved plans for a budget chain.

Denied allegations of "ruthlessness" from upset franchisees in New Zealand.

Admitted making an out-of-court payment to settle a legal dispute with the company it sold the business to before buying it back.

One senior staff member privately described the overseas closures as a "catastrophe".

Callum Davies, who founded the company in 1996, didn't go that far, but admitted they had affected the brand.

"Any store closing down is damaging to the brand. But it's really tough times for retailers."

The master franchise for Australia is owned by Mike Hird, who opened his first outlet in 2008. The deal obligated him to open 30 stores within three years but only four remain. The Queensland stores closed after going into receivership.

But Hell is bullish about its performance overall, with director Warren Powell saying sales at its 60-plus New Zealand outlets are up "considerably" from this time last year.

"Franchisees are having record weeks."

Davies said there were encouraging signs in other overseas markets, with a new store opening in India this week. Two remaining stores in London and one in Vancouver were turning a profit and more outlets would open in Ireland.

He conceded it had been ambitious to announce in 2008 the potential for 600 stores across Britain. "We were very cocky, we were very successful in New Zealand. We tried to expand quickly. It was a big learning curve."

Hell has shelved plans for a budget chain called Spawn. One outlet opened in Auckland's Remuera has closed.

Meanwhile, Hell directors have reached an out-of-court settlement with a company suing them over claims of staff harassment and bogus complaints about the Albany franchise.

Its owners were given six months to sell the outlet after Tasman Pacific Foods Group sold the Hell chain back to its founding and current directors in 2009.

Hell launched a counter-claim seeking compensation for damages to the brand caused by Flame, the company that owned the Albany store.

This week Powell said: "Most of the liquidations and closures of Hell shops happened in the period or just after the period Tasman Pacific Foods owned the Hell business."

He said franchisee turnover had dropped since the original owners bought the business back and several new stores had opened.

Hell refused to say why the case had been settled out of court or how much they paid to Flame.