Written by: Keith Tully
Published: 19th July 2018
The Gaucho restaurant group is on the brink of entering administration and becoming the latest victim of challenging operating conditions within the UK’s retail and casual dining sectors.
A total of close to 1,500 jobs could go as a result of Gaucho’s collapse, with the group having officially given notice of its intention to appoint administrators in the coming days.
The restaurant chain has two brands of outlet operating in various parts of the country, namely Gaucho and Cau, which employ roughly 700 and 800 people respectively.
In recent months, with the group struggling financially, consideration had been given to entering Gaucho into a Company Voluntary Arrangement (CVA), which might’ve enabled the business to close its 22 Cau outlets while keeping open its 16 Gaucho-branded restaurants.
However, the group’s financial position has continued to deteriorate and has now reached the point at which entering administration looks to be the only option available.
There is some hope that the business or parts of it will still be acquired by third parties and either saved prior to administration or rescued from it at a later date.
“Despite an extensive 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,” a spokesperson for the Gaucho group explained in a statement.
Cau operates within what is generally called the casual dining sector and is far from alone in experiencing financial difficulties among its peers in the restaurant industry.
The likes of Prezzo, Jamie’s Italian and Byron have all been struggling to remain solvent and financially viable in recent months.
Julie Palmer, a partner at the insolvency specialists Begbies Traynor, has described casual dining businesses as having suffered a “torrid time” of late with “wage inflation and rent inflation taking a bite out of thin margins” among operators across the sector.
“The recent consumer shift from spending in the casual dining sector to wet-led pubs, takeaway restaurants and supermarkets as the UK sat down to enjoy the World Cup has further compounded the challenges facing the sector,” she said.