While Carluccio’s casual dining competitors wail about inflation and the consumer pinch, the popular Italian restaurant-cum-deli chain is optimistic about prospects thanks to its modest tempo of expansion in the past few years.

‘We’re in a stable situation,’ says chief executive Simon Kossoff. ‘Inflation? We’ve not seen it yet.’ He is confident the group’s proposition as ‘slightly cheaper but better’ than its competitors will keep the doughty British consumer eating at Carluccio’s and, because each site is open all day, generate excellent levels of cash.

The company, which typically achieves a cash return on capital invested in its sites of more than 60%, generated £8m from operations in the year to 23 September. Pre-tax profits increased by two-thirds to £5.3m from store turnover up 18% to £54m.

Though criticised for being too slow, Carluccio's roll-out pace, at five openings a year, has proved prudent. Last year the rate rose to six and two new restaurants have already been added this year, in Stratford and Manchester, with branches in Heathrow Terminal 5, at St Pancras Station and in Cambridge to come. The pipeline for half way through next year is ‘secure’, according to Kossoff, and further forward there are ‘hundreds’ more.

Other developments include a franchising deal struck for Ireland, with the standard payments of an up-front sum plus opening fees per restaurant and a royalty on turnover. This is a risk-free way for Carluccio’s to attack new geographies and Kossoff is ‘talking about’ other regions.

Independent broker Charles Stanley has downgraded forecasts to £6.5m pre-tax profits this year and earnings of 7.7p on fears consumer spending may slow further. Although this is a first-rate company, 'some challenges’ lie ahead and the shares trade on a premium prospective price-to-earnings ratio. Remain on board, but reduce your exposure.

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