Things begin to go Carluccio’s way as new chapter opens

Before the interview can start, Simon Kossoff wants to make sure he is seated with his back to the wall at a table with a good view of his restaurant and deli, which at this moment are buzzing gently with the worry that only a failed IT system on reopening morning can create.

As group chief executive, he has resolved to step back and allow other people to solve the issue, which has prevented Carluccio's on Dublin's Dawson Street from catering to the breakfast trade on its first day back after a three-week refurbishment, but that doesn't mean he doesn't know what is happening.

Every inch of the new decor (“warmer”) and every mouthful on the menu (still authentically Italian) crossed his desk in London before it crossed the Irish Sea for implementation. He doesn’t claim to be an expert on Dublin dining, but he is most definitely on top of this little corner of it.

Carluccio’s is probably better known than its mid-priced peers in the capital’s restaurant scene because of its boom-ridden history, which saw it flirt occasionally with the headlines.

In brief, its backers – a group of businessmen including former KPMG managing partner Ron Bolger and former Anglo Irish Bank chairman, Peter Murray – rented the building it occupies at the tip-top peak of property prices and bought the Carluccio's franchise for Ireland with a view to expanding well beyond it.

Chapter closed
In the event the rent was much too frothy to allow the franchise-holders to cope with the disintegrating economy and, despite customer numbers holding up, the business model proved horribly flawed.

At one point, the restaurant closed for a week as the owners renegotiated the rent, but even this ransom-style tactic did not bear sufficient fruit to allow it to keep its head above water.

Earlier this month, the chapter closed when Carluccio’s bought back the franchise, leaving Bolger et al sharing a lost investment thought to have reached some €4 million.

For Kossoff, buying back the franchise is good news, because it allows Carluccio’s to expand in Ireland according to the original plan. He wants to open five or six Irish restaurants over the medium term, gleefully acknowledging that the excitement of the opening process is the “best thing” a restaurateur can experience.

The Irish experience started in 2005, when the eventual franchise-holders made their approach and Kossoff became interested in placing "a toe in the water" abroad. At that point, the chain had 25 Britain-based stores and was listed on London's Aim market. Its founders, cuddly Italian celebrity chef Antonio Carluccio and his then wife Priscilla, had taken a back seat and growth was very much on the table.

The Dublin restaurant took another three years to get off the ground however, with the timing ultimately sealing its fate. Kossoff is careful not to criticise the ex-franchisees, but he admits that the rent-related closure was “difficult” for a plc that needed to manage its message. “In the end, they judged it well,” he adds.

Discussions about taking back the franchise began just over a year ago, with Kossoff simultaneously negotiating with the investors and their landlord, while the investors also had to agree an exit from their 20-year lease with a reported annual rent of €680,000. The discussions began with the owners of the building, where investors included former AIB chairman Dermot Gleeson, and ended with a receiver appointed to it by Bank of Ireland.

Kossoff won’t talk specific numbers, but he reckons peak-time rents in Dublin were about 50 per cent too high to allow tenants to run restaurant business.

“It took a really long time,” he says of the new agreement, noting that the group’s size and longevity make it “a better tenant”. Meanwhile, Dawson Street becomes part of a group of 86, thus allowing for greater supply and cost efficiencies.

Kossoff identifies few differences between his British and Irish customers, apart from perhaps that we are “more up for a good time”. He hopes to soon be in a position to know us better, as Carluccio’s sets about getting bigger, first in another Dublin city centre location and afterwards in locations probably including Dundrum Town Centre, Kildare Village and Belfast.

Themed restaurants
The Dublin suburb of Stillorgan is also on his radar, while the new city centre outlet is likely to be based somewhere between South William Street and the very southern tip of the northside, but not in Temple Bar.

Property agents are unsurprisingly keen on the prospect, with the Carluccio’s model of all-day dining (it opens at 7.30am) meaning the company can, in Kossoff’s words, “bring life” to a street at almost all times. Likely sites will be at least 278sq m (3,000sq ft) in size, with Kossoff’s lengthy experience of working his way up in the restaurant business meaning he can be relied upon to talk tough with property agents as he prepares to spend some £750,000 per opening.

He started his career in a “plastic tourist trap” pub in a London hotel after an economics degree and a hospitality management course, escaping the hotel-management hierarchy only to find himself (admittedly at a good time) in a universe of themed restaurants, before being randomly introduced to the Carluccios by a former boss.

He identifies this “quirk of networking” as his biggest piece of career luck since it set him on the path to casual dining, from which he has not strayed since. It also matched him with a brand which bears his legacy as much as that of its Italian founders, since it was Kossoff who banged on the doors in 1999 to raise the money that the Carluccios needed to expand beyond their one Neal Street outlet in London.

He says the market was not overly receptive (online strategies were the big thing at the time), leaving him to raise the required initial £2 million from a group of 35 individuals and a further £2 million through a subsequent rights issue.

This £4 million business now has an annual turnover of £120 million and has passed through two new phases of ownership. The 2005 flotation came about because Kossoff and his team had promised the investors liquidity, while they also believed it would be easier to maintain management independence on the stock market.

'Enormous stamina'
Expansion into the Middle East came in 2006, bringing the company into contact with the Landmark Group, the vast retail and hospitality investor founded in 1973 in Bahrain by husband and wife team, Micky and Renuka Jagtiani. In 2010, Landmark took a majority stake and Carluccio's exited the stock market at a premium for its then shareholders.

Kossoff says he doesn’t miss the presentations to analysts but adds that private investors’ access to every little detail can also occasionally have its downsides.

As for the restaurant business he very clearly loves, he says it’s “really tough” and requires “enormous stamina”, such as that displayed by his Dublin team as they worked into the night on Monday to prepare for the re-opening, only to be thwarted by a till malfunction.

The good news is that the problem was repaired in time for lunch, with business brisk at time of writing.