Gaucho collapses into administration with 540 jobs lost at its Cau restaurants

'Rapid over-expansion' helped to bring about demise of the chain, administrators say

The Cau brand has struggled in an 'oversupplied' casual dining sector but he said the more premium Gaucho restaurants continue to trade well, Deloitte said (EPA)

Steak restaurant chain Gaucho has gone into administration, with all 22 of the group's Cau restaurants to close leading to the loss of 540 jobs, Deloitte has confirmed.

Matt Smith, joint administrator, said the Cau brand had struggled in the "oversupplied" casual dining sector but he said the more premium Gaucho restaurants continue to trade well.

A number of factors had seen the Cau restaurants underperform including "rapid over-expansion, poor site selection, onerous lease arrangements and a fundamentally poor guest proposition", Mr Smith said.

"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 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.”

The group employs 1,305 people, including 540 at Cau, 714 at Gaucho and 51 at its head office.

It emerged yesterday that Gaucho had filed a notice of intention to appoint administrators. That gave the company ten days of protection from creditors and to find a buyer, which it has failed to do.

Former Pizza Express backer Hugh Osmond was among those who looked into a deal for the chain, which is understood to owe its banks around £50m.

A string of retailers and restaurants have announced closure plans and job cuts this year.

House of Fraser will shed around 6,000 jobs after it agreed its turnaround deal with creditors in June, while Prezzo, Byron and Jamie’s Italian have all shut branches.