Dubai’s Landmark Group wins approval for Carluccio’s restructuring
Company will invest $13m in restaurant portfolio and up to 30 UK branches will close, but no impact in region
Landmark Group, the Dubai retailer that owns the Carluccio’s Italian restaurant chain, has secured approval from creditors to enter a restructuring programme that will see the closure of 30 loss-making restaurants in the UK, however there will be no closures in the Middle East, a spokesman said.
“Those sites are completely unaffected,” a UK-based spokesman for Carluccio’s told The National. “It’s a UK process so only affects around 30 restaurants in the UK.”
Following a strategic review of the business, 91 per cent of creditors voted to approve a rescue plan for Carluccio’s on Thursday night, which will be administered through a UK company voluntary arrangement (CVA), which prevents the firm from going into administration.
Carluccio’s, which was founded by the late Italian chef Antonio Carluccio in 1999, operates 103 restaurants in the UK. However, it has fallen victim to challenging economic conditions on British high streets, which have forced other retailers to go into administration or launch similar restructuring proceedings.
“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 [taxes],” Will Wright, restructuring partner at professional services firm KPMG, which is supervising the Carluccio’s CVA, said in a statement earlier this month.
Two weeks ago, another UK high street brand, Mothercare, announced restructuring plans – and its Middle East franchise operator told The National regional stores would be unaffected – as well as fashion retailer New Look and Toys R Us.
Landmark, which also owns UAE retailers Home Centre, Splash and Baby Centre, bought Carluccio’s in 2010 in a deal that valued the UK operation at more than £90 million (Dh436.50m) at the time.
Under the plans, up to 30 UK restaurants will close, Carluccio’s UK said in a statement on Thursday. The remaining 69 will be retained at current rents. “No landlord for the group’s remaining portfolio of locations is affected and nor are any of the group’s other creditors,” the statement added. For affected stores, a reduced rent, equivalent to 67 per cent, will be paid for six months, according to KPMG.
Approval of the CVA paves the way for a far-reaching investment programme, underpinned by a £10m investment by Landmark in upgrading the remaining restaurants, which it said last month was subject to the rescue plan, first unveiled on May 17 , being approved.
“The vote was vital to protecting our strong core business and the Carluccio’s brand,” said UK chief executive Mark Jones. “The positive outcome enables us to kick-start an extensive programme of reinvigoration across our estate, with the aim of elevating the guest experience and underpinned by our brand ethos of minimum of fuss, maximum flavour, which was so passionately championed by our founder, Antonio Carluccio.”
“The Landmark Group supports the Carluccio management team and vision in its extensive programme of reinvigoration through a renewed financial commitment,” a spokesperson for the group told The National. “We look forward to the positive future and ongoing development of the Carluccio’s business and its passionate people, with an aim to elevate the overall customer experience.”
Updated: July 1, 2018 12:24 PM