Italian restaurant group Carluccio’s has announced that it is pursuing a Company Voluntary Agreement (CVA), including the possible closure of 34 sites.
Carluccio’s has said negotiations will take place with landlords regarding the lossmaking sites to seek “mutually agreeable terms”.
The other 69 sites within the group will not be affected.
If a CVA is approved by more than 75% of creditors at the end of May, Carluccio’s will undertake an investment programme in its remaining sites, supported to the tune of £10m by majority shareholder Landmark Group.
Carluccio’s is the latest victim of the downturn in casual dining which has already seen the likes of Jamie’s Italian, Byron and Prezzo undertake CVAs and announce widespread closures.
The announcement comes after new CEO Mark Jones and CFO Andrew Campbell, who both joined the business in January, undertook a review which concluded that “urgent action was required”.
Jones said: “Carluccio’s remains a very strong brand known for high-quality food. Independent research shows it is extremely well regarded by the British public in the premium Italian dining space.
“However, the business is not immune from well-documented pressures sweeping through the casual dining sector and indeed much of the wider UK high street, including retail.
“Regrettably, this is the only course of action available and if approved, will safeguard the future of the group, protecting this strong core business. It is therefore in the best interests of the company, its people, its creditors and its customers.”
Carluccio’s was founded Carluccio’s Caffe in 1998 by Antonio Carluccio and his then wife Priscilla, with the support of co-directors Simon Kossoff, Stephen Gee and Peter Webber. It went on to become known as one of the UK’s best-known casual dining chains, offering authentic Italian food at reasonable prices.
Carluccio, who died in November 2017, and his fellow directors sold the business to Dubai-based Landmark Group seven years ago, and Carluccio subsequently acted as a consultant.
Accountancy firm KPMG has been appointed to oversee the restructing of the business.
Will Wright, restructuring partner at KPMG and a proposed supervisor of the CVA, said: “Carluccio’s is a well-established and much-loved part of the UK high street. But like many other businesses in the casual dining sector, in recent times the company has been adversely impacted by a combination of well-documented pressures including a gradual decline in consumer spending and increasing competition, coupled with the rising costs of labour, raw materials, rent and business rates.
“Today’s announcement follows a strategic review of the business undertaken by the company’s directors. Specifically, this CVA is designed to tackle the cost of the company’s leasehold obligations across its restaurant portfolio, which if successful, will allow the business to move forward across a core, more profitable estate.”