Creditors of Carluccio’s have backed restructuring plans that could see a third of the casual dining chain’s UK restaurant estate axed if favourable deals with landlords aren’t reached.
A total of 91% of creditors approved its Company Voluntary Arrangement (CVA) rescue plan – well above the 75% it required for it to proceed – paving the way for the firm to tackle the cost of its leasehold obligations.
While 69 of its sites will carry on as normal under existing rental agreements, 34 restaurants are now set to pay reduced rent, equivalent to 67%, for the next six months, while the company engages with landlords to agree the basis of any continued trading from those premises.
Carluccio’s directors have already undertaken a strategic review of the business and are now preparing to execute a turnaround plan that they hope will lead to a more profitable estate, albeit one that is likely to be smaller in unit terms.
Its majority owner, the Dubai-based Landmark Group, pledged an injection of funding to finance an “extensive and far-reaching investment and growth plan” should the CVA receive approval. Reports suggest the investment could be worth as much as £10m.
Mark Jones, who only took over as CEO of Carluccio’s in January, said: “The positive outcome enables us to kickstart an extensive programme of reinvigoration across our estate – with the aim of elevating the guest experience and underpinned by our brand ethos of minimum of fuss, maximum of flavour, championed by [founder] Antonio Carluccio.”
Will Wright, restructuring partner at KPMG, which oversaw 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.”