The owner of the Gaucho restaurant chain is exploring a sale of the business as part of a review which includes the closure of its poorly performing Cau outlets.
Sky News has learnt that Gaucho will this week initiate talks with potential buyers as it seeks to place itself on a sustainable financial footing amid torrid trading conditions in the casual dining sector.
The decision to kickstart a review of options comes just a fortnight after it emerged that Gaucho had drafted in advisers to examine whether to close or sell Cau’s 22 restaurants, putting roughly 750 of its 1,500 staff at risk of losing their jobs.
Sources said that Equistone, Gaucho’s owner since 2016, had now decided to expand KPMG’s mandate to solicit proposals from potential investors for the entire company.
Gaucho is Britain’s biggest premium steak restaurant chain by number of outlets.
Insiders cautioned that there was no certainty that a sale would result, adding that an insolvency mechanism called a Company Voluntary Arrangement (CVA) remained an option to exit the Cau estate.
All of Gaucho’s sites will continue to trade during the review process.
In a statement to Sky News, a Gaucho spokesman said: “Having completed a strategic review and engaged with key stakeholders, the directors have instructed advisers to commence an options process.
“The process aims to secure a viable long-term structure for the business.
“This may or may not lead to a sale.”
The review comes after Cau has seen double-digit declines in like-for-like revenues, with over-expansion, poor site selection and onerous lease arrangements among the factors now contributing to Gaucho’s financial difficulties.
The Gaucho-branded estate, which comprises 16 restaurants, is said to be performing “in line” with the broader restaurants sector, and is not under threat of closure.
Gaucho recently appointed a new management team in an attempt to stabilise its financial performance.
The company’s founder, Zeev Godik, stepped down several months ago.
He was replaced by Oliver Meakin, who joined from Maplin, the electricals retailer which itself plunged into administration earlier this year.
By pursuing a restructuring that involves shutting restaurants, Gaucho will join rival casual dining chains such as Byron, Carluccio’s, Cote and Prezzo, all of which have confirmed similar plans in recent months.
A combination of rising costs and more cautious consumer sentiment has hit casual dining businesses, while retailers including Carpetright, New Look and Poundworld have also been forced to press ahead with plans to axe scores of shops.
This week, Marks & Spencer added to the sense of gloom by expanding the number of stores it plans to close by 2022 to 100.