In 1991 Carluccio extended the business by opening a small Italian delicatessen next door to the restaurant. In 1999, with the help of some investors, the first Carluccio caffe launched.
Today, Carluccio's brand equity is well established. With a chain of 23 successful outlets, the company has an estimated value of 拢50m. Next month Carluccio will make another bold move by going public when he floats his caffe business on the AIM. The switch from privately owned brand to publicly listed company is an ambitious move, but also one fraught with danger. Brand-building and the financial markets are often uncomfortable bedfellows and there are a number of potential pitfalls.
After flotation you usually lose the founders of the brand, who are now too rich (thanks to their shares) and too constrained (thanks to the new plc structure) to take a day-to-day role in the business.
Founders are important because they embody the brand and possess an instinctive grasp of brand strategy. When they leave and are replaced by generic executives and standardised decision-making, the results often prove disappointing.
No matter how good the Unilever marketing machine is, it will never build its Ben & Jerry's brand as well as its eponymous founders did.
And what about the City's quarterly expectations of growth? Brands are built over decades; shares are traded hourly. Even the strongest brands can falter when forced to dance to the brutal, repetitive rhythm of the City.
When Pizza Express went public in 1993 it became the darling of the market thanks to constant expansion and increasing like-for-like sales. After eight years of aggressive expansion, however, the once-exclusive chain had become little better than an upmarket Pizza Hut. The share price had increased tenfold, but brand equity had been seriously eroded. Sales began to decline and the share price went into free fall. Pizza Express then launched a series of ill-advised brand extensions, such as Pizza Express To Go, and sold its branded pizzas through major supermarkets in a misguided attempt to appease its investors. The company was bought out in 2003.
Another problem is managerial focus. It is hard enough to engage senior management in customer orientation, but once a company is listed, the only market most executives align themselves with is the financial one.
In the heady 90s Sir Richard Greenbury was crowned Retailer of the Year and knighted because of his leadership of Marks & Spencer. But while Greenbury was doubling the M&S share price, vital tracking data was revealing a double-digit decline in the retailer's brand associations among consumers.
The rest, as they say, is history.
The ultimate concern for any listed company is that its ownership is up for grabs. The original motivation for Manchester United's flotation was to raise funds and allow fans to take a stake in their beloved club.
Thanks to deep pockets and an aggressive takeover strategy, it is now Malcolm Glazer's. Taking a company public is often a sure-fire way to ensure it ends up run privately by someone entirely inconsistent with its original brand equity.
There are high hopes for Carluccio's, and a successful listing will help its evolution. But beware, Antonio: your brand is now much stronger and much more vulnerable than ever before. Ogni medaglia ha il suo rovescio - every medal has two sides.
30 SECONDS ON ... CARLUCCIO'S
- The restaurant chain's flotation on the AIM is set to value the business at 拢50m-拢55m.
- Antonio and his wife, Priscilla, the chain's marketing and brand director, could make up to 拢10m from the flotation.
- The 68-year-old chef and his wife own about 20% of the company. The majority of its backers are from venture capital groups. The firm plans to sell 49% of its existing share capital in the float.
- The group recently launched two further caffes in Reading and Westbourne Grove in West London.
- Carluccio's has doubled its number of outlets and nearly trebled its turnover since 2002. It reported pre-tax profits for the 52 weeks to 25 September 2005 of 拢3.5m - up 46% on the previous year - on a turnover of 拢37m.
- The chain serves about 60,000 people a week; sales have increased by 90% in three years.