Coronavirus: Carluccio’s and BrightHouse fall into administration as Covid-19 hits economy

Struggling restaurant chain and rent-to-own retailer collapse as experts warn that pandemic will result in more high street closures

Ben Chapman
Monday 30 March 2020 14:57
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Coronavirus: Big high street names close stores to stop virus spread

Carluccio’s has fallen into administration, blaming tough trading conditions made worse by the coronavirus outbreak, which has seen restaurants shut their doors.

The decision casts doubt over the chain’s 71 UK restaurants and 2,000 employees. It came moments after rent-to-own company Brighthouse announced it was going into administration, putting 2,500 jobs at risk.

Advisory firm FRP has been appointed to explore options for Carluccio’s, including a sale of all or parts of the group.

Most of the company’s staff will continue to be paid up to 80 per cent of their salaries through the government’s job retention scheme while these options are explored.

Carluccio’s had been in trouble before the government ordered restaurants, pubs and bars to close to slow the spread of coronavirus.

Earlier this month the chain, founded in 1991, asked its landlords for a rent holiday as it struggled to deal with falling customer numbers.

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.”

BrightHouse, which sells televisions, washing machines and other household items on credit, collapsed after being hit by a regulatory crackdown on high-interest lending.

Britain’s biggest “rent-to-own” operator typically charges customers around 70 per cent annual interest. Last April, the Financial Conduct Authority capped interest and fees that companies operating in the sector could charge.

BrightHouse temporarily shut down its 240 stores last week after the government announced lockdown measures on Monday night.

Dr Gordon Fletcher, retail expert from the University of Salford Business School warned that coronavirus would cause more high street chains go into administration.

He said: “While these two failures have come only a few days into the government’s stronger social distancing measures there will be others as the pressure of having no casual high street shoppers will place pressure on their cash flow and the rationale for their underlying business models.”

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