According to a source close to the firm, it lost two major supermarket contracts in the past year, forcing it to rely on one remaining deal with Sainsbury.
The supermarket confirmed it was ending that agreement last week, forcing Pasta Reale, located in Crawley, to call in the administrator.
‘Need to retrench’
After the loss of the first two contracts, “there was a need to retrench the business ready for reduced volume”, the source said.
“It cost a lot of money to reconstruct. It had to get rid of a lot of people.” That, coupled with a recall, had dented the business, he said, adding that the recession had also made business even more of a struggle.
Pasta Reale had reached annual sales of £30M two years ago, employing 200 people, and was taken over by venture capitalist Ranworth Capital in December 2012.
BDO business restructuring partners Matthew Tait and Kim Rayment were appointed joint administrators over Pasta Reale. They are currently seeking a purchaser for the facilities and assets of the company.
The firm had needed to make 169 people redundant, said BDO.
‘Gradual loss of custom’
“The company experienced a gradual loss of custom over the past year and, as a result, has experienced a deterioration in its working capital position,” said Tait in a statement issued by BDO on the situation.
“Despite the best efforts of the company's directors and stakeholders in the past months, the directors were left with no option but to place the company into administration.
“Going forward, we will seek to achieve a sale of the company’s facilities and assets and maximise recoveries for creditors.”
Pasta Reale grew out of an Italian restaurant that was set up by Virginia Lopalco, her husband Salvatore (Nini) and her brother Roberto Santi in Croydon.
First Italian restaurant
Trattoria Bella Venezia was the first Italian restaurant in the area and swiftly became a roaring success. The family made their own pasta, selling the surplus to a local delicatessen.
Eventually, in 1979, Virginia, Salvatore and Roberto set up their first dedicated fresh pasta factory in a small, disused West Sussex bakery just outside Balcombe Village.
From there the business expanded to supply several London delis, Harrods and Waitrose. Pasta Reale was formed, operating out of a 5,388m2 factory, and gained contracts with top supermarkets.