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Closure of 40 Carluccio’s restaurants costs 1,000 workers their jobs

Carluccios


More than a thousand furloughed workers at the Carluccio’s restaurant group have lost their jobs after the closure of 40 of its 71 outlets by administrators.

Boparan Restaurant Group (BRG), which owns the Giraffe and Ed’s Easy Diner chains, has acquired the Carluccio’s brand and 30 restaurants across the country for a knock-down price estimated at £3 million.

They include nine in London and two in Manchester.

Administrators from FRP Advisory said that the deal with BRG, part of Ranjit Singh Boparan’s food empire, would save more than 800 jobs. The Carluccio’s in Dublin was also acquired by Boparan, but was not part of the FRP administration.

FRP said that it was working closely with the Redundancy Payments Service to ensure that the 1,019 staff affected received their redundancy payments.

The Italian brand was founded by the late celebrity chef Antonio Carluccio in 1999. For the past decade it has been owned by the Dubai-based Landmark Group, which has invested more than £100 million, an extraordinary sum compared to the proceeds of today’s sale.

Like other casual dining businesses, even before the Covid-19 crisis it had been hit by higher costs and over-expansion across the industry. It closed 35 restaurants in 2018 as part of a company voluntary arrangement but continued to struggle.

Administrators from FRP were appointed at the end of March, shortly after the enforced closure of the restaurant sector, and its employees were furloughed under the government’s coronavirus job retention scheme.

Although the BRG wants the Carluccio’s brand, it is understood to have earmarked at least ten sites for conversion to the Slim Chickens brand, for which it holds the UK master franchise.

It is understood that during the negotiations BRG was allowed access to the Carluccio’s landlords to renegotiate leases to take account of the post-coronavirus world, possibly involving a move to turnover-related rent.

Boparan faced competition from Three Hills Capital, the backer of the Byron burger chain, with which Carluccio’s had previously held abortive merger talks. Tesco had expressed interest in taking a handful of sites for conversion to its Tesco Express format.

Mr Boparan, known as the “chicken king” after making his fortune from supplying chicken to supermarkets, acquired the Giraffe chain from Tesco in 2016 for an estimated £13 million and a few months later bought the Ed’s brand via pre-pack administration for £8.75 million. He was subsequently forced to close 27 loss-making Giraffe and Ed’s sites under a CVA.

Satnam Leihal, managing director of BRG, said: “Whilst it is an extremely challenging time for the sector, we believe quality hospitality businesses will recover in the long term as people return to eating out.”

The woes of Carluccio’s come as KKR, the private equity backer of the Casual Dining Group, races to negotiate a deal to save the business from collapsing. The Café Rouge and Bella Italia operator filed a notice on Monday of its intention to appoint administrators, a mechanism that gives it ten days’ protection from creditors while it considers options. A total of 6,000 jobs are at risk.



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