Deficit cuts create uncertainty for restaurant chain

The group, which grew pre-tax profits 8 per cent, to 2.7m, in the 26 weeks to March 28, warned the climate was "likely to remain difficult to predict and uncertain 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."

The group said its business – which combines all-day trading with its restaurants – was proving "extremely resilient" with cash balances improved despite the return of VAT to 17.5 per cent in January.

Although Carluccio's has a low average spend of 13 per customer, VAT is seen as a prime target for a rise to tackle the deficit – with a possible increase 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 there was a "question of how the consumer is going to behave going forward", he added that Carluccio's is serving 140,000 customers a week. The group now trades from 45 outlets in the UK after opening sites in Wimbledon, Exeter and Cardiff so far this year.

The firm, which is also opening a new restaurant in Milton Keynes in July, said all of its new stores so far were trading "encouragingly ahead" of expectations. It has a further seven in the pipeline, of which five are due to open before the end of 2010.

Carluccio's was founded in 1991 by Antonio and Priscilla Carluccio with the aim of offering quality, authentic Italian food at reasonable prices.

Antonio Carluccio has been a regular face on television cookery programmes, but is no longer involved in the day-to-day running of the restaurant business.