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Gaucho considers closing Cau branches as part of restructure

15 May 2018

Gaucho considers closing Cau branches as part of restructure

UK-based Argentine restaurant chain Gaucho has mooted plans to close branches of subsidiary Cau as part of an effort to restructure.

Who is Gaucho?

Gaucho is a London-based, Argentina-themed restaurant group that is responsible for administering 16 venues across the capital.

In 2010, Gaucho launched a casual dining sub-brand named Cau, which specialises in beef dishes including steak, steak sandwiches and burgers. Cau grew quickly, with 22 new restaurants opening nationwide.

Six years later, Equistone (a private equity firm) purchased the Gaucho group, after originally backing a management buyout in 2005. Earlier this year, Gaucho hired former Maplin boss Oliver Meakin. Maplin filed for administration in February 2018.

Gaucho is now considering closing all of its Cau restaurants as part of efforts to restructure using a company voluntary arrangement (CVA). If this comes to fruition, the move would result in the loss of around 700 jobs in total.

However, with the performance at the core Gaucho restaurants said to be in line with expectations, the company has said these venues are likely to be safe.

Why is Gaucho considering closing Cau branches as part of restructure?

For over a year, Cau has recorded double-digit falls in sales. Though Gaucho has yet to set out its preferred route, management is thought to be looking to restructure using a CVA.

Cau has been subject to a host of external forces in recent months, as have many other major restaurant chains. These forces include:

  • High levels of competition
  • Restricted consumer spending (due to inflation outstripping wages)
  • Increasing business rates
  • Rising minimum wage costs

Gaucho has announced that KPMG has been appointed in order to assist them in appraising their options.

A spokesperson for Gaucho commented: "As part of a comprehensive strategic review, the group’s new management team, with the support of its shareholders, is at the early stages of exploring a number of financial restructuring options. No decisions have yet been made."

How does this move reflect the wider restaurant industry?

Far from occurring in isolation, this move from Gaucho reflects wider restaurant industry trends.

Last week, Côte announced that it was considering closing a number of its Jackson + Rye and Limeyard restaurants. Elsewhere, a host of other restaurant chains – including Byron Burgers, Jamie’s Italian, Prezzo and Chimichanga – have sought to use CVAs to close branches.

Other high street businesses have not fared much better of late either. Poundworld is closing around 100 stores via a CVA, while Carpetright is set to close 81 branches and House of Fraser is expected to shut around 20 of its shops.

Calling for expert support now will give Gaucho the best possible chance of staying buoyant long-term. Make sure you initiate action to restructure and retrieve your company’s situation before it's too late.

Categories: CVA, Administration, Turnaround, What is a CVA or Company voluntary arrangement?

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