Deloitte has been appointed as administrator to the holding company of steakhouse brands Gaucho and CAU, with the axe immediately falling on the CAU brand’s 22 locations.
The 16 restaurants operated under the more upmarket Gaucho brand will continue to trade while a buyer is sought, meaning that 750 jobs in these restaurants and the head office are safe for now. More than 500 jobs will be lost as a result of CAU’s demise.
Gaucho first opened in the UK in 1994 and has become a fixture in Manchester, its St Mary’s Street location next to House of Fraser being just one of four locations opened in regional cities.
However, the more recently arrived CAU brand, which launched in 2010, has struggled in a more crowded market. CAU locations in the North West are at Castle Street in Liverpool, Wilmslow, Didsbury and MediaCityUK.
Deloitte said that in addition to substantial cost headwinds facing all dining operators, the group has suffered as a result of the material underperformance of CAU, which has suffered declining sales for three years and is now “significantly loss-making”. As part of its brief, Deloitte will seek potential takers for the CAU sites.
Matt Smith, joint administrator, was damning in his assessment of CAU: “Unfortunately the CAU brand has struggled in the over-supplied 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 casual dining sector has been buffeted this year, with Jamie’s Italian, Prezzo and Byron among those urgently putting into action branch closure plans in a bid to stay afloat.
Smith continued: “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.”
Private equity firm Equistone bought a majority stake in the Gaucho group for £100m-plus in January 2016. A spokesperson for the company 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, a notice of intention to appoint administrators was submitted.”