Firms Need to Tighten Belts as Carluccio's Calls in CVA - CPA

Firms Need to Tighten Belts as Carluccio’s Calls in CVA

17th May 2018.

The Italian restaurant chain founded by Antonio Carluccio is set to become the next casual dining operator to be restructured by means of a company voluntary arrangement.

Trading on the high street has proved a risky business, with retailers and restaurants struggling with low profits and an even lower morale amongst staff. According to a new report from The Times, Italian food chain, Carluccio’s, is the most recent restaurant group to turn to a Company Voluntary Arrangement for help in keeping the kitchen doors open. Jamie Oliver’s had to close a number of his branches in London, along with burger chain Byron, and fellow Italian, Prezzo.

In a similar vein to the so-called Retail Apocalypse, brick and mortar restaurants are seeing tough competition from online delivery providers such as Just Eat and Hungry House. More pop-up restaurants have also opened around London, providing consumers with new tastes while allowing the restaurants to move around to encounter new competition and demographics.

Whether they work within a restaurant setting or as a retailer, business owners need to be willing to adapt, and most importantly to be flexible. Of course, investing in new technology and building an attractive website are activities that are easier said than done, and some businesses simply cannot afford it. At the Credit Protection Association, our debt recovery services open the door for our members who struggle to find funding for new opportunities and ventures.

The Times has reported that Carluccio’s has hired KPMG to advise on a CVA to enable the chain to shed or secure a rent reduction on about a third of its 103 UK restaurants.

Carluccio’s, led by Mark Jones, its new chief executive, will become the latest casual dining chain to use the insolvency procedure as it seeks to restore its fortunes in the face of rising labour, rates, rent and food and drink costs, coupled with fragile consumer spending and oversupply.

A separate survey of 600 restaurant operators in the capital has found that 90 percent of owners believe their business will become “unmanageable” if rents rise as predicted in 2018, while 84 percent said they would be forced to either close down or move premises.

The study, published by real estate consultancy Cedar Dean Group (CDG), said that there could be an “exodus” of restaurants from central London in the coming years, with business-owners moving to satellite towns and regional cities to survive.

CDG predicts we will more remote central kitchens, and an exodus of restaurants from central London in favour of fringe locations or even cheaper, regional cities.

“We are already seeing a lot of the innovation going to the east and south of London where levels are more affordable,” said CDG boss David Abramson.

“It is plain and simple the numbers just don’t add up. Without intervention, the restaurants will be forced to close their doors and by the time landlords wake up it will be too late.”

In this climate of political uncertainty and economic difficulty, it is not easy for those who work on the high street. The high costs of trading on the high street have heavily impacted British businesses, with business rates and rent poised for an increase despite their presence already crippling the SME community.

If business owners are to entice modern consumers back to the high street, they need to create an incentive. New open-planned trading spaces, new interactive tasting menus, or just online deliveries all illustrate to the consumer how the brand is embracing more modern concepts. Of course, any changes to the brand will require some extra cash, and this is where credit management companies come into the equation.

At the Credit Protection Association, the collaboration between our debt recovery and credit management services free up cash flow and provide the products to protect it. We will chase down unpaid invoices and late payers and afford our members the financial freedom to pursue new expansion opportunities and new concepts. We also provide our members with thorough credit checks and status reports to ensure nothing will derail this new prosperity.

Here at CPA, we fight to the tooth for our members, particularly those who are seriously considering company closure. We’ve recently created a new department within our company dedicated to getting our members rightly compensated in accordance with the Late Payment of Commercial Debts (Interest) Act 1998, unlocking hidden cash and potential in our members, as well as encouraging them not to give up.