Coronavirus: Carluccio's collapses putting 2,000 jobs at risk

CarluccioImage source, Carluccio

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."

Denise (name changed) has been working for Carluccio's for the past four years and was employed at its branch in the Grand Central shopping centre in Birmingham when it first emerged that the chain was in trouble.

"We weren't told anything," she said. "We found out via BBC News."

Denise said Carluccio's staff had been assured that their March salary would be paid as normal, but when they got their payslips, they found that they had received only 50% of what they were owed.

"That's holiday pay, sick pay, they've deducted 50% of everything," she told the BBC. "I can't pay my rent this month. I don't have children, but other people who have are having to make decisions about whether to pay rent, heating bills or food bills."

She said that officials from the Unite union were contacting Carluccio's on their behalf, seeking clarification about when the other half of the money would be paid.

"We've received legal advice and we've been told that what they've done is illegal," she said, adding that the deductions brought their pay to below the minimum wage.

Image caption,
Antonio Carluccio founded the chain in 1999

John Colley, associate dean at Warwick Business School, told the BBC that firms in the sector were likely to follow Carluccio's into administration.

"They over expanded, as did many other restaurant chains," he said.

Price wars and increases in the minimum wage had put restaurants under severe pressure, he added.

"I think the fact that Carluccio's was so quick to go into administration says that this was not due to coronavirus," said Prof Colley.

"All the issues were there anyway and this is just the last straw."

Existing problems

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.