Carluccio’s, the Landmark Group-backed chain, which operates c100 restaurants nationwide, is set to become the latest sector operator to undergo a Company Voluntary Agreement (CVA), which could impact around a third of its UK estate.
It is understood that the Mark Jones-led company, which appointed KPMG to advise on its options earlier this year, will announce details of the proposed CVA later today or in the coming days. It is thought that over 30 of the company’s c100 sites in the UK will be impacted by the process and could subsequently face closure. The process will not affect the brand’s 14 international sites in Turkey and the UAE.
The c30 sites under the spotlight are believed to be spread across the UK and to include sites outside the capital in Chelmsford and Bromley, plus London-based restaurants in Islington, Muswell Hill and Chiswick. The majority of the Carluccio’s UK estate is believed to be trading in-line with the CGA Peach Tracker, and therefore in-line with a good proportion of the sector in general. It is thought that it is not in market towns where the brand is particularly struggling but in over populated “strips”, for example Upper Street in Islington.
MCA understands that under the terms of the CVA, that the company’s estate will be split into two categories, with c70 sites proposed to be held at monthly rents, while a further c30-35 sites would have their rent cut to 67% for six months with tenant break options.
MCA understands that Landmark, which acquired Carluccio’s in 2010 for c£90m, remains supportive of the business and the new management team led by Jones and chief financial officer Andrew Campbell, who were both appointed earlier this year.
Like the majority of the sector, Carluccio’s has been impacted by the numerous costs and headwinds that have impacted the restaurant industry, and especially the established casual dining chains, over the last 18 months.
MCA understand that the group’s current EBITDA level is c£5m, against the last £13.2m EBITDA figure it reported for the year to 26 September 2016.
The CVA, which will involve landlords and no other creditors, is seen by the company as the only option left open to it in order to assure the future of its core estate.
A source close to the situation said: “Fundamentally there’s is a very good core in there, however like other high street restaurant firms it has its share of over-rented sites holding back the whole group. There’s no other option and the [CVA] process will pave the way for investment and revitalisation.”