Italian restaurant chain Carluccio’s has announced it is to close 34 restaurants as part of a recently announced company voluntary agreement (CVA).
As many 103 UK sites are also set to “exit” as part of restructuring at the company.
The CVA, yet to be approved by creditors will see the company receive £10m in new funding underpinned by majority shareholder Landmark Group.
A successful conclusion to the CVA process will release Carluccio’s from loss-making sites, and the group has said it is open to entering constructive discussions with affected landlords to reach new and mutually agreeable terms.
The company will require a 75% vote from creditors in order for the CVA to go ahead.
Carluccio’s CEO Mark 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.”
The CVA follows a strategic review of business at the company that concluded that urgent action was required to enable the business to weather the headwinds affecting the industry and to return it to a stable footing.
Creditors are set to vote on the CVA proposal at the end of May.
Carluccio’s will be assisted throughout the CVA process by KPMG.
Will Wright, restructuring partner at KPMG 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. Crucially, it forms one element of a wider turnaround plan which, pursuant to 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.”