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Morning Briefing for pub, restaurant and food wervice operators

Sat 28th Mar 2020 - Byron and Carluccio’s in failed merger talks
Byron and Carluccio’s in failed merger talks: Carluccio’s, the Mark Jones-led chain, and better burger brand Byron have held emergency talks regarding a merger this week, Propel understands. It is understood Three Hills Capital, which backs Simon Wilkinson-led Byron and is led by founder and managing partner Mauro Moretti, approached Carluccio’s about a possible merger. Three Hills Capital has previously been keen to add or develop a further restaurant brand or concept alongside Byron, which it acquired at the end of 2017. However, those talks came to nothing and Landmark Group-backed Carluccio’s is expected to appoint administrators next week after being forced to close its restaurants amid the coronavirus pandemic. The company is working with FRP Advisory to handle the process. Earlier this week 51-strong Byron appointed adviser KPMG to explores ways to shore up its own balance sheet. Byron and Carluccio’s both undertook company voluntary arrangements in 2018, shedding underperforming sites. They subsequently both received new £10m cash injections from their respective backers. However, it’s thought the performance of both had still been under pressure before the pandemic. It’s thought Byron could follow Carluccio’s into administration. Both companies had been exploring tapping into the government’s new funding schemes. Earlier this week it was revealed Carluccio’s board had been working on a plan to mothball the business while retaining its 2,000 staff on 80% of pay. By placing the business into administration, it can still ensure its staff can be put on furlough and paid 80% of their wages under the government’s Coronavirus Job Retention Scheme (CJRS). Under the guidance for the new scheme it states: “Where a company is being taken under the management of an administrator, the administrator will be able to access CJRS.” Propel understands many other sector operators will explore this route, where they can effectively mothball their businesses, in the coming weeks. In a letter to staff, Carluccio’s said it was looking at all avenues to give the business a “fighting chance of survival”. Alongside staff only receiving 50% of their wages for March, Jones is set to receive no pay for the month. Jones wrote: “A key part of what the board and I have been trying to do is to ensure a long-term future for the company and the jobs of as many of our colleagues as possible. As part of this we have been forced to close all our restaurants and it has been necessary to put the company into a mothballed state. The rapid decline in sales and closure of our restaurants has exhausted the company’s cash resources and we have been struggling to make the payroll payments this month. Our owner, The Jagtiani Foundation, has been very loyal to the company and has, over the years, invested more than £100m and never taken a dividend. Against this backdrop, it has agreed an additional cash injection that will enable the business to pay about 50% of the March wage costs you are due – but I’m afraid no more.” Carluccio’s also declined to pay its quarterly rent bill this week.
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