AlixPartners advising Casual Dining Group on restructuring

The firm behind casual dining brands such as Bella Italia and Café Rouge has filed to appoint administrators. According to reports circulating in the British press, Casual Dining Group considers the move a “prudent measure” while it works with consultancy AlixPartners on a possible restructuring programme.

The number of licensed premises in Britain continued its steady year-on-year decline in 2019, with one survey finding there had been a fall of 2,920 such venues over the last 12 months. Restaurant numbers in particular took a knock – despite small flourishes in the group restaurant scene.

A combination of falling consumer spending power, heightened business rates and rising import costs saw restaurants of all shapes and sizes impacted – particularly in the casual dining segment. Now, the addition of coronavirus into the mix has compounded the crisis faced by every aspect of the food and drink market.

The latest firm which looks as though it might join the likes of collapsed brands such as Carluccio’s is Casual Dining Group. The company, which owns Bella Italia and Café Rouge, put the future of some 6,000 workers in doubt in mid-May, with the news it has appointed administrators.

Casual Dining Group is understood to have been in difficulty for some time, and while the group has apparently seen profitability improve since it agreed a refinancing deal with US private equity firm KKR in 2018, its liquidity problems have been exacerbated by the lock-down, which has seen venues closed for weeks. Restaurant chains were told to stop seating in March, and while the Government’s temporary job preservation measures have meant Casual Dining Group and many like it have survived so far by reducing their costs, many fear that when such establishments finally reopen, social distancing measures will make them less profitable or even unviable.

The restaurant group, which also operates the Las Iguanas chain, furloughed the majority of its staff, traded from around 250 sites across the UK before the lockdown. Now, Casual Dining Group has stated that its appointment of an administrator is a matter of prudence, which will give the company 10 days of breathing space, legally shielded from creditors and landlords, to consider “all options” for restructuring.

A Casual Dining Group spokesperson said, “As is widely acknowledged, this is an unprecedented situation for our industry and, like many other companies across the UK, the directors of Casual Dining Group are working closely with our advisers as we consider our next steps. These notifications are a prudent measure in light of the company’s position and the wider situation.”

Earlier in the week, Casual Dining Group confirmed that it was working with advisors from consultancy firm AlixPartners over a potential restructuring programme. The possible restructuring to repair the group’s finances consists of several options, including company voluntary arrangement – which could see it shut less profitable restaurants and renegotiate rents, though this is a decreasingly popular approach among landlords, and several attempts by similarly distressed firms have been blocked in recent months. Alternatively, specific brands could also be put into administration, in order to prioritise other properties.