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Martin Williams reports covers on the up after Gaucho overhaul sees cow hides banished and prices cut

23 October 2018 by
Martin Williams reports covers on the up after Gaucho overhaul sees cow hides banished and prices cut

It's less than two months since Martin Williams returned to Gaucho to drive its transformation as it emerged from administration. But in that time the changes have rained down and seen him banish cow hides, overhaul the menu and cut prices in a bid to entice new audiences.

Williams, who left his position of managing director of the group to form M Restaurants in 2014, has been drafted back in by banks SC Lowy and Investec who have acquired Gaucho as new conglomerate, Lomo Bidco.

The group officially exited administration today after three months that saw it shed casual dining brand Cau. The 16 Gaucho restaurants survived the process with administrators saying they were "profitable" and had "a strong underlying brand".

However, Williams still sees plenty of work ahead to create a sustainable proposition that not only encourages Gaucho's traditional audience to visit more often, but also entices more millennials and more women through the steak houses' doors.

He said: "I think it was surprising how little had changed in the last four to five years and that is perhaps where the problems had arisen. The first thing we did was take a menu that was too large, too overpriced and slim it down, improve the quality, reduce the pricing and create a better value proposition. We introduced that last week and the feedback has been amazing."

Williams said the increase in vegetarian offers was not simply a "token gesture". He added: "We have a lighter, cleaner, much tastier menu than we had two weeks ago - we're going in that direction. I think 90% of the guests who dine with us have steak and our steak should always be the hero product but we should be able to attract people to Gaucho who are drawn in by the quality of the main courses and the starters - not just the steak."

There will also be an investment in staff and their training with levels of hospitality being just one one area where Williams feels the company's former boss Oliver Meakin, who departed following the administration, had a lack of experience.

He said: "In the last year we had a CEO who didn't have a true understanding of hospitality or of restaurants, or a passion for it and my view is if you're looking after a hospitality group you need to have a love of restaurants and wine. Oliver's record speaks for itself."

Williams said that recent changes had already reaped rewards with the restaurants last week seeing their first cover growth in "many months".

This was accompanied by a 10% fall in average spend, but that does not concern the restaurateur. He said: "To see that cover growth is really exciting and I don't think it's a coincidence that at the same time we've seen spend per-head drop. Both of these are really healthy, we need to be accessible. It's a definite decision to be less profitable per-head, with lower margins, but we will become more profitable through cover growth."

Looking forward Williams said the 16 restaurants would be refurbished to create bespoke offerings. He explained: "We're talking to a couple of branding companies at the moment about how this will work with the logo and the new looks - embracing the heritage of the company and respecting the history but at the same time it will be brighter, much cleaner, much more innovative, much cooler and much more female friendly.

"Each restaurant should look different and should reflect the geography. I use Smithfield as a great example. It should be much more polished concrete and reflect the fact its in the middle of the meat packing district, much more spit and sawdust. While Sloane Avenue, which is in South Kensington, should be much more glamorous and like Buenos Aires has arrived.

"The days of black and white, brown and white cow hides and dark restaurants that resemble strip clubs are over."

Williams stressed that the company was in a strong position to undertake the refurbishment project despite the recent CVA.

He said: "The CVAs we have seen in the industry up to now have seen a renegotiation [of rents and rates]. In the case of Gaucho the banks didn't use the CVA to do that, it was purely a mechanism to get out of administration and dispose of the Cau brand. There were not any renegotiations hence the 98% creditor approval.

"The banks have looked at it as genuine shareholders rather than debt providers and the company has come out of it with a very healthy working capital fund, dramatically reduced debt, and is suitably invested not only to be a very healthy company moving forward but also to have a capital expenditure facility that will fund the refurbishments of the restaurants."

Approved CVA paves the way for Gaucho sale>>

Gaucho sold to lenders as Martin Williams returns to brand to drive development>>

Cau branches closed with immediate effect by Gaucho Group administrators>>

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