Following Gaucho’s escape from collapse through a CVA, Martin Williams has successfully merged his own steak restaurant business M with the troubled chain he once helped to run. Now he has big plans to expand both brands under the newly formed Rare Restaurants. He tells Neil Gerrard how the deal came about and what the future holds
With the number of well-known restaurant brands ending up in hospitality’s equivalent of intensive care over the past year, it’s apt that in his former career as an actor Martin Williams made an appearance in BBC hospital drama Casualty.
Williams has taken on the task of curing a sick patient in the form of steak restaurant chain Gaucho, which has just merged with his own five-year-old steak restaurant group M.
While there’s an odd parallel to be drawn with the acting, his experience as former managing director of Gaucho is undoubtedly going to prove more useful when it comes to leading the newly combined businesses.
When he left his former employer five years ago, Williams felt that Gaucho was starting to look a little liverish. “I was very frustrated with the fact that the brand wasn’t evolving. It had gone through a number of private equity deals and the way they saw an exit was through cutting costs. I felt it was starting to damage the value for money and the experience,” he explains.
He could hardly have imagined when he founded M Restaurants in 2014, following his departure from Gaucho, that he would end up running both companies. The original plan was to open three M sites within three years, run them for another year and then provide the investors with an exit. As it happens, it has taken a year longer, but with the Gaucho deal, Williams has done just that.
His investors will exit “profitably” (which Williams admits is a relief, particularly considering one of them is his father-in-law), while he will remain a “very minor shareholder” in the new business, which is backed by specialist bank Investec and hedge fund SC Lowy.
If that sounds simple, the deal was actually some time in the making. Williams says he approached Gaucho’s former private equity owners Equistone around a year before it became apparent Gaucho and sister brand Cau were in difficulty and suggested a deal, but it chose instead to bring in former Maplin Electronics chief executive Oliver Meakin as CEO in January 2018.
By July that year, Gaucho’s parent company Gioma had called in administrators and immediately all 22 Cau restaurants were closed. Investec and SC Lowy acquired Gaucho through a firm called Lomo Bidco (now renamed Rare Restaurants), based on the approval of a company voluntary arrangement (CVA) allowing the business to restructure its debt and keep all 16 Gaucho restaurants open. Williams was brought in as interim CEO to help bring the business out of administration and build a new team, with a view to a merger with M.
As it happened, Williams already had an informal relationship with Investec because some members of the team are customers of M. “We started talking about Gaucho and whether it was still a good proposition and I was very passionate that it was an amazing brand,” he explains.
But when he returned to the helm, Williams found a business that appeared to be in stasis. “The reasons I left five years ago were still valid. The design had never changed. It was confused and didn’t really have a message. A lot of amazing talent had also left,” he adds. For years, Gaucho had attracted admiration among industry peers for its ability to command such a high average spend, at around £70 per head. But that too was starting to prove a problem, making it unaffordable for many would-be customers.
Williams’ action has been swift. The Hong Kong Gaucho was closed immediately and the Dubai site sold. The company has also sold off its vineyard in Argentina that supplies its wine, although it will maintain a link, embarking on a new wine collaboration there.
“We have basically consolidated the estate, which in turn means we have got half the size of head office, which had become bloated and lazy. Now we have got a core business, which has always done well without the distractions of the non-profitable elements,” Williams explains.
Prices were cut by 15% on his first day in charge and covers have since risen by 20%. The menu has been made less steak-centric, with more vegan, gluten-free and vegetarian options. There is a £26, three-course set menu for lunch, which runs until 7pm, and Gaucho is working with booking affiliates to create a fixed-price proposition.
As chief executive of Rare Restaurants, Williams has also brought in a young head office team, many of whom are former Gaucho employees, to help him turn the combined business around (see panel).
“The next challenge is attracting talent to the management and again get a group of ambitious and hungry individuals who want to be part of the journey. It is not very often you get the chance to reset an existing brand,” he adds.
Meanwhile, Williams still has his multi- faceted M restaurant brand to handle. Threadneedle Street, which opened in 2014, is trading well, while the Victoria restaurant, which opened in 2015, has taken some time to establish itself in an area not known as one of London’s dining hotspots – although it is trading better now that the nearby Nova development is open and award-winning musical Hamilton is playing at the newly renovated Victoria Palace Theatre.
Victoria was followed in 2017 by the smaller and more casual M Bar & Grill in Twickenham, specialising in wine by the tap, quirky cocktails and a mix of healthy and indulgent bar food. “The big plus side of Twickenham is the rugby, which has been incredible for us. Right now that is the cake and it needs to be the icing on the cake – but if we didn’t learn from Victoria, then we are certainly learning now that it is a journey and it takes time. Ultimately, it is a successful concept that we would like to roll out,” Williams says.
All in all, he finds himself in charge of a 20-strong restaurant group that he hopes to grow to 26 within the next two years, helped along by stakeholders who, post-administration, injected a seven-figure sum as working capital and a significant capex facility.
Williams expects it to be enough to refurbish the Gaucho estate over the next two years to give it a new look, as well as launch the new 9,000 sq ft flagship M restaurant in Canary Wharf, scheduled to open in the Newfoundland tower in 2020. It will feature river views, a restaurant, grill, wine tasting, cocktail bar, private members’ lounge, private dining room and terrace. “A lot of the people who work in Canary Wharf know the brand, so we won’t be establishing ourselves from nothing. It is the nicest venue you can find in the Wharf and, with our proposition, it will fly,” he predicts.
There should still be enough left over to open another two Gauchos and a “couple more” M restaurants over the three-year period too, with Williams eyeing locations such as Liverpool for a possible future Gaucho opening. International openings, however, do not interest him. “It is just too much of a disruption. I think there is enough opportunity in London and the UK without needing to look further afield,” he says.
Williams has previously been highly critical of the “dated and rightly dying” chain restaurants. Is the fallout from a string of administrations and CVAs finally over? Not necessarily. “Ultimately, the threat of Brexit has created a lack of consumer confidence, which has hurt the high street. People are no longer quite so casual about nipping out and having a local dinner because they can’t be bothered to cook. That, combined with Deliveroo and UberEats, has really hurt that sector and we are probably only halfway through that journey.
“In that environment you see really young, clever concepts emerging and you see tired, dated concepts struggling and they will continue to struggle unless they evolve. Even with M, it has probably had three incarnations within four years. You just need to be constantly looking at what you are doing with fresh eyes and evolving it to your guests’ tastes and desires.”
With a financial shot in the arm and under a new regime set by his energetic head office team, Williams hopes to see his freshly combined steak restaurant business stay in the pink of health.
Martin Williams’ career to date
Hailing from North Yorkshire, Williams’ first taste of life in hospitality was not especially auspicious. At the age of 16, he found work as a kitchen porter at a local hotel. “I was terrible. It was in the days before dishwashers, and I was diligent but too slow,” he recalls.
He moved to London to study at drama school and filled the time between roles working in a range of hospitality jobs. But at the age of 23, the acting stopped. “I decided the prospect of being an actor with no job security wasn’t as exciting as hospitality,” he explains.
He landed a role running the Harrods outpost of City Centre Restaurants’ Wok Wok, an upmarket chain specialising in south-east Asian cuisine, before moving on to become a general manager at Zizzi when it had just six restaurants, working his way up to area manager. From there, he went on to spend a year at fine dining restaurant Christopher’s in Covent Garden before a nine-year spell at Gaucho. He first served as GM of Gaucho’s Canary Wharf restaurant before he became an operations manager and then operations director, and finally spent four years as managing director overseeing UK operations.
After nearly a decade at Gaucho, Williams realised it was time to move on. After encouragement from friends and family, and with the support of a few key investors, he founded M in 2014, opening its first site in London’s Threadneedle Street, a stone’s throw from the Bank of England.
The Rare Restaurants team
Jenna Bromage Former Gaucho PR director returns as brand and marketing director
Ross Butler Former Gaucho director of international operations returns from running a consultancy in Dubai to become managing director
Max Castaldo The Argentina-born former head chef at London’s Lanesborough hotel has been appointed executive chef
Jim Kottler The former D&D London chief financial officer becomes CFO
Gemma Meale The former group people director of Splendid Hospitality Group has joined as HR director
Travis McKechnie A former Gaucho operations manager, who has been director of operations for Roka Restaurants in the US, becomes director of operations.
Martin Williams on…
… going it alone
The last five years since he started M Restaurants have been “amazing – equally challenging and rewarding,” says Williams. “The biggest challenge is always managing cashflow and having enough working capital in the business; that produces fears that you never had as an employee and a sense of responsibility to your shareholders and to your team to have a profitable business. There is an exit now which rewards investors and some of the key team and gives M Restaurants a great future in the new company.”
… £10-an-hour starting wage
In January, M Restaurants introduced a £10-an-hour starting wage as a challenge to hospitality’s reputation as a low-pay industry.
“It was inspired by something I read in The Caterer about people striking over wages and unions saying there should be a £10 starting wage. I thought that, other than our KPs, we pay everyone more than £10, so I wanted to make a statement by making our starting wage £10 an hour and suggesting that everyone follows suit.
“There are plenty of people in restaurants who earn a great remuneration, but we don’t shout about it.”
… wellness and mindfulness
M Restaurants offers its workers five paid ‘mindfulness days’ per year as an opportunity to recover when they aren’t feeling their best and as an alternative to a sick day. At the start of the day the company sends a massage therapist to give employees a free massage, and they then spend the rest of the day as they choose. The company also provides access to a counselling app called Spill, where employees can share their work and life worries with a counsellor, available 15 hours each day.
“Millennials want a work-life balance. You want people coming to work to feel inspired and feel part of something. With Gaucho, we are now creating personal and career goals for each individual who works with us. You have to look at the work and life of the team and be much more holistic in your viewpoint,” says Williams.