Up to 34 restaurants in the Italian group Carluccio’s could face closure after the firm asked landlords to agree to a series of rent reductions in a proposed company voluntary arrangement(CVA), the restaurants could close as early as July.
The firm has enlisted accountants KPMG to oversee the restructing of the business, which will see the company ask landlords to agree to rent reductions at 34 restaurants – a third of its UK portfolio.
The proposed supervisors of the CVA are Will Wright and Rob Croxen from KPMG’s restructuring practice.
Mr Wright, the 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 se
ctor, 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.
“Crucially, it forms one element of a wider turnaround plan which, pursuant t
o the CVA’s approval, will see an injection of funding into the business from the company’s majority shareholder, to fund an extensive and far-reaching investment and growth plan.”.
Carluccio’s is the latest to fall victim of the downturn in casual dining sector which has already seen the high profile names such as Jamie’s Italian, Byron and Prezzo undertake CVAs and announce widespread closures.
Carluccio’s currently operates 103 restaurants across the UK, and the CVA proposal will divide the company’s sites into two categories, with 69 “Category 1” sites which will be retained at existing rents, and the remaining 34 “Category 2” sites, at a negotiated reduced rent, equivalent to 67%, paid for six months, while the company engages with landlords to agree the basis of any continued trading from these premises.
Carluccio’s needs to secure at least 75% creditor approval for the CVA for it to proceed.