Carluccio's has entered administration, putting up to 2,000 workers at risk of losing their jobs.
The Italian restaurant, which has 71 restaurants across the UK, appointed administration experts FRP Advisory late last week.
The decision follows what the firm called a "sustained period of challenging trading conditions, which have been exacerbated by COVID-19" as well as broader problems facing Britain's restaurant business.
Those pressures combined to mean Carluccio's was unable to meet its financial obligations as they were due.
Geoff Rowley, joint administrator and partner at FRP, said: "We are operating in unprecedented times and the issues currently facing the hospitality sector following the onset of Covid-19 are well documented.
"In the absence of being able to continue to trade Carluccio's, in the short term we are urgently focused on the options available to preserve the future of the business and protect its employees."
The administrators are now urgently addressing all options for the future of Carluccio’s, which include mothballing restaurants using government support, as well as selling on some or all of the business.
The chain - founded by chef Antonio Carluccio 20 years ago - has been struggling since the outbreak of coronavirus.
Experts said Carluccio's staff would still be eligible for the Coronavirus Job Retention Scheme, and so get paid up to 80% of their salaries, if the company was in administration.
"We welcome the latest update on the coronavirus job retention scheme and look forward to working with HMRC to access the support it provides for companies in administration and their employees," Rowley said.
"As this fast-moving situation progresses we will remain in regular communication with all employees and key stakeholders, and will provide a further update in due course."
Pubs and restaurants have faced a tough couple of weeks, with the Government announcing their closure, although takeaway services are allowed to continue.
Chiquito was put into administration on Thursday night - seeing 61 of its restautrants close.
Marston's, which runs 1,400 pubs across the country, and Mitchells & Butlers, the owner of Toby Carvery and All Bar One also both warned they were struggling.
