A company voluntary arrangement (CVA) saw Carluccio’s shut 35 of its 100 stores last year in a bid to reduce its leasehold obligations and restore profitability. Less than 12 months on, CEO Mark Jones is spearheading its revival through a £10m business transformation programme called ‘Project Fresca’. FEJ was at the Casual Dining Show to hear what went wrong in the first place and why he is now redirecting the business towards the premium end of the market.
Having witnessed a string of well-known high street names from the casual dining space implement CVAs over the past 18 months, few in the market were taken by surprise when Carluccio’s announced in May last year that it too was seeking the same form of respite.
Like many within the same sector, it had been adversely impacted by a combination of pressures including a gradual decline in consumer spending and increasing competition, coupled with the rising costs of labour, raw materials, rent and business rates.
CEO Mark Jones was less than six months into the role — having joined from Goals Soccer Centres in January 2018 — when he was confronted with overseeing a huge restructuring exercise. He admits the company’s rapid roll-out programme simply caught up with the business and, with costs spiralling, its approach was unsustainable.
“The issue that drove the business to CVA was not necessarily week-to-week sales performance, it was that we had signed a number of lease commitments which required us to open sites, £1m a go, and we didn’t have the cash to do that. We weren’t running out of cash on a day-to-day basis but we would have run out of [eventually],” he explained at the Casual Dining Show.
Jones admits the company was guilty of opening too many “marginal” restaurants, which sucked up cash that would have been better spent on refurbishments among other things. Launching a restaurant every month turned out to be a “huge distraction” from its core business. “In hindsight, we should have done stuff differently but we’re not alone in that, it is a common element of casual dining,” he concedes.
As part of a wider strategy to put Carluccio’s back on the family dining and date-night agenda, Jones helped raise £10m of private investment from shareholders, which is now being ploughed into a business transformation programme called ‘Project Fresca’.
The move has led to it refurbishing selected sites into new-ambience, art-deco restaurants that showcase Carluccio’s revamped style and strategy.
“Carluccio’s as a brand had lost its way on a Friday and Saturday night. It wasn’t special enough, people would come in at lunch and breakfast. Casual dining is so sophisticated that you can’t just put a candle on the table, turn the lights down and expect it to compete with a ferocious set of competitors. We had to completely reimagine and reposition the brand.”
The chain has since formed a separate team within the business to lead the Fresca Project, with Jones explaining that its renovation work has covered all elements of the brand and business. So far, it has renovated four sites which include Chester, Dublin, Newcastle and, most recently, Richmond, which opened in February. Carluccio’s held back for a six-week period of analysis before reopening the restaurant in order to utilise customer feedback from previous relaunches to strengthen the offering.
Statistics suggested it could be doing better so it focused on elevating service and “premiumising” the menu. It has upgraded the food offer, improved service and administered an interior makeover that is very different from what customers would normally expect when visiting Carluccio’s.
In hindsight, we should have done stuff differently, but we’re not alone in that, it is a common element of casual dining”
Jones claims the feedback it has received has been “off the scale”, adding: “It’s signalling a way for us to head forward and the plan is to do another six or seven this calendar year, that’s where we’re heading. Hopefully, there will be another reiteration of what we have done at Richmond.”
Significantly, Carluccio’s is now attempting to reposition the brand in the “premium casual dining” sector because it did not “sit comfortably” in the mass market due to its pricing, Jones says. The chain has upgraded its offer with a more premium food menu and a greater variety of fish and steaks, plus a more extensive wine list which offers a French tipple — a rarity for a brand which is known for being ‘pure Italian’.
Alongside the food and drink element, Carluccio’s has also tried to change the ambience at the Richmond branch by buying comfier furniture, altering the lighting and playing different music. Jones explains: “That was one of the big issues that we struggled with, our furniture was very café, very day-time, flimsy and noisy. If you go to Richmond now it’s sumptuous and comfortable and customers can happily sit there for an hour and a half sitting and drinking a bottle of wine. All those things pushed us into a premium casual dining space and that’s where we want to be.”
Despite changing the brand’s approach, Jones insists that he will never resort to extensive discounts to get customers through the doors — unlike many of its competitors.
He states: “One area we have tried to steer clear of is discounts; we do a little bit every year during January, almost as a ‘thank you’ for Christmas. But you will not find us doing 40% across the board on a voucher. Our view is that you’ve got your everyday pricing wrong if you can do that. We’re investing much more into the quality of food and the quality of service.”
Before Carluccio’s began Project Fresca it had seen its dinnertime traffic drop on weekends and witnessed lunch periods generate higher revenue across the board. Since rejuvenating the selected sites the chain has watched evening meals bounce back and overtake weekend lunchtime sales.
“Our lunch had got bigger than our dinner on those days — and in the refurbished sites that’s the other way around now, so we’ve kept lunch and grown dinner. It’s a very competitive market and I think it’s much more around brand sensory,” says Jones.
“If you’re booking a restaurant and you’re booking it for a husband and wife, you need to be confident that the experience is going to be fantastic — and that’s how you win on a Friday and Saturday night. But that does require menu, service and decor and that can only come from Fresca sites — that’s not to say that we abandon it everywhere else but to really win on the sites all of those have to come together.”
Despite seeing a hike in Fresca site sales, Jones is honest about the current climate. He points out that sites on the high street or near failing retailers have especially struggled in recent years.
He comments: “Anybody telling the truth would say that trading is still tough out there. There are exceptions to that, there are premium brands which are exceptions to that, but the mass market is tough. So we have to spend this money to be strong in the area.”
We had to completely reimagine and reposition the brand”
“Footfall is absolutely key to our brand. If you are in the middle of a shopping centre and on one end is Debenhams and the other is House of Fraser, you are not going to have both of those in a year or two’s time. That’s going to be a pretty tough place to be. So what you need to understand is why customers are coming to that part of the street or centre and it’s that highly detailed work that’s required.”
Jones and his management team have had to take a long, hard look in the mirror over the past year. What they have seen hasn’t always been pretty, but they are adamant that they have found the right remedy to ensure the business has a bright future ahead of it.
Throwing off the menu development shackles
Carluccio’s is synonymous with Italian cuisine, but eagle-eyed customers will have spotted some exceptions of late after the chain explored ways to expand its menu. Since upgrading its food and drink offer, the company has added its first non-Italian items which include avocados and French wine.
In a bid to attract more customers and stay up to date with culinary trends, CEO Mark Jones says the company realised it no longer made sense to restrict itself to Italian-only ingredients. A “radical” rethink was required.
“We were being defined too closely with being pure Italian,” he explains. “Absolutely everything we sold had to be Italian. And then we went to Italy and spotted people eating avocados — it turns out you can actually serve smashed avocado on toast for breakfast in an Italian restaurant.”
Additionally, it has also introduced French wine to its restaurants, having only ever done so once before in 20 years.
“The one example was in [founder] Antonio Carluccio’s Neal Street restaurant where he had French wine as well as Italian wine. So I think we were cautious about being too Italian and that had constrained us and affected us from doing some menu development work, so we’ve thrown off the shackles.”
The firm still has more than 10,000 recipes from its founder and sticks to his menu development mantra of ‘maximum flavour, minimum fuss’.
But its willingness to begin introducing items from outside of Italy look set to provide it with greater flexibility as it hones its food proposition.