Gaucho Group will close 22 Cau branches with immediate effect after falling into administration, but 16 Gaucho restaurants will continue to trade while a buyer is sought.
Administrators Deloitte said the Cau branch was “significantly loss-making” having suffered negative like-for-like sales for three years.
Deloitte said the closures will result in approximately 540 redundancies.
The Gaucho brand remains profitable and branches will continue to trade as administrators seek to maximise the value achievable. Buyers will also be sought for the former Cau sites.
Matt Smith, joint administrator, commented: “Unfortunately the Cau brand has struggled in the oversupplied casual dining sector with rapid over-expansion, poor site selection, onerous lease arrangements and a fundamentally poor guest proposition all being factors in its underperformance. As such, the decision has been made to close this loss-making part of the group with immediate effect, unfortunately resulting in today’s redundancies.
“The Gaucho business on the other hand, which operates in the premium dining market, continues to trade well in its market segment, is profitable and has a strong underlying brand and guest loyalty. We are taking steps to stabilise the business following our appointment and are now seeking expressions of interest in terms of a sale of the Gaucho business. We appreciate the support of the group’s colleagues and management team and other key stakeholders in achieving this aim.”
Gaucho Group announce its intention to appoint administrators yesterday.
A spokesperson for the group said: “Despite an extensive options process which attracted proposals from a number of parties, it is with regret that due to the complexities of the group’s legal structure, ongoing underperformance at Cau and the level of indebtedness, the directors have been unable to find an agreed, solvent solution.
“Consequently, the directors have today filed in court a notice of intention to appoint an administrator for the business.
“Until such time as the administrator has been appointed and agreed plans with management, it is business as usual.”
It is understood that the Gaucho’s owner Equistone approached lenders with a number of offers that could have saved the group, but that these were rejected.
A spokesperson for the investment firm said: “Equistone has been a supportive majority shareholder to Gaucho Group since its investment in 2016, working closely with the company to address the challenges presented by the adverse trading conditions that have negatively impacted the UK casual dining sector as a whole. Despite Equistone having presented Gaucho’s lenders with, and committed to funding, a business plan that would have maintained the company as a going concern, we understand that a notice of intention to appoint administrators has been submitted.”