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Gaucho, which owns the CAU chain of grill restaurants, today became the latest victim of the casual dining crunch as the firm entered administration.
The firm announced its intention to close all 22 branches of CAU as it concentrates on selling the Gaucho Grill chain of restaurants.
The closure will result in 540 job losses at CAU, which has several restaurants across Cheshire and Greater Manchester including Wilmslow, Didsbury and Salford Quays.
Hampered with high levels of debt and a complex legal structure, the restaurant chain had been unable to find a buyer in its current form.
The Argentine steak and burger restaurants were thought to be struggling to pay a £1m-plus tax bill before a HMRC deadline last Friday.
Three investors were thought to be interested in a deal to buy the restaurants, but all offered less than the £50m Gaucho owed to its banks.
The ‘ongoing underperformance’ of CAU was a particular issue for the firm. Gaucho’s newly appointed administrator, Deloitte, described CAU as ‘significantly loss making’.
The BBC quotes joint administrator Matt Smith as saying: “Unfortunately the Cau brand has struggled in the oversupplied 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.
“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.”
Gaucho’s lenders rejected a plan to put the CAU chain into Company Voluntary Arrangement (CVA) earlier this year.
This type of insolvency solution allows a company to continue trading as it pays creditors, but creditors must agree to the arrangement.
A CVA must be arranged through a Licensed Insolvency Practitioner.
Gaucho has 16 restaurants across London and the UK, including one set inside an old methodist church on St Mary’s Way in Manchester Wilmslow, Media City, Salford and Didsbury.
Steak restaurant CAU has 22 sites across the UK, including restaurants in Wilmslow, Didsbury and Media City.
Tom Fox, Umbrella Insolvency’s Licensed Insolvency Practitioner, based in Wilmslow, said: “Gaucho and CAU are just the latest victims of consumer’s changing dining habits. Byron, Prezzo and Carluccio’s have all closed restaurants as part of a CVA plan.
“It is understood that lenders to Gaucho would not agree to a CVA for CAU because of its high levels of debt and consistent underperformance, and that ultimately left Gaucho’s Directors with little option but to put the company into administration due to a lack of funding options.”