The owner of the Bella Italia restaurant chain is in talks with creditors about a radical restructuring that will involve an injection of substantial new funds by its shareholders.
Sky News has learnt that Casual Dining Group (CDG), one of the UK’s biggest high street restaurant operators, is close to unveiling plans for a series of insolvency arrangements aimed at putting the business on a sustainable long-term footing.
Sources said on Monday that an announcement was likely to be made this week.
It is expected to involve company voluntary arrangements (CVAs) for two of its three brands – Bella Italia, Café Rouge and Las Iguanas – with the other being placed into administration.
The proposals represent the latest evidence of how the COVID-19 pandemic is impacting a once-thriving sector.
Many thousands of restaurant staff across the country have been furloughed under the government’s Coronavirus Job Retention Scheme, including many CDG employees.
Prior to the UK-wide lockdown starting in March, CDG trades from roughly 250 outlets across the UK, and employs about 6,000 people, making it one of the largest restaurant operators in Britain.
A number of CDG’s sites are understood to have been earmarked for closure, with many of the remaining sites likely to be the subject of negotiations about rent reductions.
Preliminary talks are understood to have got under way with landlords late last week.
One source close to CDG said the objective of the plan was to preserve as many jobs and restaurants as possible.
CDG, which is controlled by the private equity giant KKR, is understood to have appointed the advisory firm AlixPartners to work on the restructuring.
The company’s largest brand, Bella Italia, trades from more than 100 sites, while there are roughly 60 Las Iguanas and Café Rouge restaurants apiece.
Responding to an enquiry, a spokesman for CDG 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.”
KKR and Pemberton Capital Advisors, another financial investor, have controlled CDG since early 2018, when they took control from Apollo Global Management.
Prior to the lockdown, and under new management, CDG’s performance is understood to have improved.
Last year, it appointed Rooney Anand, the former boss of pub and restaurant group Greene King, as its new chairman.
Since the outbreak of the pandemic, a broad array of restaurant operators, such as Prezzo and Wahaca, have drafted in professional advisers to explore their financing options.
Others, including the burger chain Byron, have decided to kick off formal sale processes.
Carluccio’s and Chiquitos have found themselves unable to avoid insolvency proceedings.
Earlier on Monday, Sky News revealed that the owner of the Giraffe chain was on the brink of concluding a deal to acquire approximately 30 Carluccio’s outlets, its brand and head office.
The deal, if completed, should salvage the jobs of about 900 of the company’s 2,000 staff.