Carluccio’s could close up to 30 restaurants in a rescue plan under a Company Voluntary Arrangement (CVA).
More than 90% of Carluccio’s creditors approved the CVA, which will allow it to close loss-making branches.
That means almost one in three Carluccio’s restaurants could close their doors.
As part of the rescue plan, Carluccio’s majority owner, the Dubai-based Landmark Group, is to invest £10m in upgrading the remaining restaurants.
The 103-strong chain joins a lengthening list of established restaurant businesses losing the battle against higher costs and increased competition.
In the year to 25 September 2016, even though revenues rose 2.7%, spiralling costs meant pre-tax profits fell by 81% to just £982,000.
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The company had a management shake-up in January with a new chief executive, Mark Jones, former boss of Goals Soccer Centres, and a new chief financial officer, Andrew Campbell, from YO! Sushi.
Mr Jones said: “The positive outcome enables us to kick-start an extensive programme of reinvigoration… with the aim of elevating the guest experience and underpinned by our brand ethos of minimum of fuss, maximum of flavour, which was so passionately championed by our founder Antonio Carluccio.”
Earlier this month, following a strategic review, the new team admitted that “urgent action” was needed to keep Carluccio’s afloat.
The casual dining sector of the restaurant trade has been suffering from a general fall in consumer spending. Chains have also faced higher rents and rates, as well as rising wages with the increase in the National Living Wage. Prezzo, Jamie’s Italian and Byron also used CVAs to close restaurants.
Italian ingredients, from prosciutto to pecorino, have become more expensive since the devaluation of the pound in 2016.
Carluccio has already tried to rebrand itself several times, introducing Via Carluccio’s, a grab-and-go format in Tottenham Court Road, a hotel restaurant, and serving pizza for the first time in 2016.
But much of the new competition in London is now coming not from other chains but small independent start-ups such as Padella, Sorella, Flour and Grape or Sager and Wilde.
Carluccio’s was co-founded by chef and restaurateur Antonio Carluccio as an Italian food shop in 1991 with the first cafe opening in Market Place, London, in 1999. Its deliberately simple Italian food and drink proved to be immensely popular. In 2010, it was bought by Landmark for £90m.
Carluccio himself died in November last year aged 80, having sold his majority stake in the company in 2005.