Carluccio's cautious amid tax uncertainty

ITALIAN restaurant chain Carluccio's yesterday warned that the "dramatic" action looming to slash the UK deficit had cast a shadow over trading prospects.

The group, which grew pre-tax profits 8 per cent to 2.7 million in the 26 weeks to 28 March, said the climate was "likely to remain difficult to predict in the near term".

Carluccio's said: "The impact of a coalition government following the outcome of the general election and the need to take dramatic action to reduce the budget deficit will only add to this climate of uncertainty."

Although the firm has a low average spend of 13 per customer, VAT is seen as a prime target for a hike to tackle the deficit – with a possible rise to 20 per cent putting further upward pressure on its prices. Seymour Pierce analyst Hugh-Guy Lorriman said: "Considering the price rises of the year so far and the likelihood of a VAT rise in the short term, the second half looks vulnerable."

Managing director Simon Kossoff said a move to 20 per cent would add about 50p-60p to the bill for a couple dining at Carluccio's, but the rise would be seen across rivals as well.

"This does not seem to us to transform the position in terms of dining at Carluccio's," he added.

While he admitted that there was a "question of how the consumer is going to behave going forward", he added that the business was serving 140,000 customers a week.

The group currently trades from 45 outlets in the UK after opening sites in Wimbledon, Exeter and Cardiff this year.