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Italian restaurant chain Carluccio’s has gone into administration, blaming “challenging trading conditions” exacerbated by the coronavirus. Administrator FRP is “urgently looking at options” for the future of the firm.

These include mothballing the business using government support, as well as trying to sell all or parts of it. Most of the company’s 2,000 employees will be paid through the government’s job retention scheme while these options are explored.

This allows for staff to be paid up to 80% of their salary. The restaurant chain’s collapse came minutes after rent-to-own firm BrightHouse – the biggest rent-to-own operator in the UK – also collapsed.

Collectively, the two firms employ 4,500 people. Carluccio’s had already warned it was facing permanent branch closures due to the coronavirus.Before the outbreak it was hit by the crunch in the casual dining sector and recently urged the state to step in.

Geoff Rowley, joint administrator and partner at FRP, said: “We are operating in unprecedented times and the issues currently facing the hospitality sector following the onset of Covid-19 are well documented.

“In the absence of being able to continue to trade Carluccio’s, in the short term, we are urgently focused on the options available to preserve the future of the business and protect its employees.”

Mr Rowley said FRP looked forward to working with HMRC to access the support it provided for companies in administration and their employees.

He added: “As this fast-moving situation progresses, we will remain in regular communication with all employees and key stakeholders, and will provide a further update in due course.”

John Colley, associate Dean at Warwick Business School said only the strongest firms would be able to survive the next few months.

“Those companies without cash or only limited availability of credit have a major problem. Many businesses simply do not have access to adequate cash or credit lines.

“Unless there is significant government underwriting of bank debt many loans will be foreclosed and banks will not be keen to increase their exposure,” he said.

 

Restrictions aimed at curbing the coronavirus pandemic have recently forced all cafes and restaurants to close. Carluccio’s has faced some difficult times in recent years, closing a third of its restaurants in 2018 as part of a Company Voluntary Arrangement (CVA) rescue plan.

Like many in the casual dining sector, it has felt the brunt of a fall in consumer spending, combined with higher business rates, and increases in the National Living Wage.

Prezzo and Byron also used CVAs to close restaurants while Jamie’s Italian went into administration last year.

The chain was founded more than 20 years ago by celebrity chef and restaurateur Antonio Carluccio, who died aged 80 in 2017.

 

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