Rising from the ashes

There is certainly change afoot at Gaucho. The business exits administration today following a productive CVA process, which closed last week and has seen the focus return to its 16 eponymous sites.

Recently installed chief executive Martin Williams, also CEO and founder of M Restaurants, is understandably positive about the rebirth of the company where he was MD for more than nine years.

According to Williams, not a lot had changed since he left in 2014 – and that was the problem. “It is surprising how similar the restaurants are now to when I left,” he says. “The brand hasn’t evolved, and others, like Hawksmoor and Goodman, have overtaken it.”

But, from the sounds of things, that’s all about the change. Williams, along with Gaucho’s shareholders, Investec and SC Lowy, are keen to see the business flourish again. Williams says the fact the CVA process, unlike many other recent cases in the sector, has been a positive process, and essentially acted as a tool which has allowed the company to come out of administration, is one to be celebrated.

He says it is also a glowing example of the support that financial institutions can give. “In the past four years with M, I’ve seen banks go out of their way to support us as a business and banks pretty much abandon us as a business. In this case it’s a great example of two institutions actually seeing the value of the company and its long term future, understanding it’s fundamentally a profitable business and wanting to invest in it and go through this process to create a future, rather than an ending,” he says.

A new team is born

A new management team has been brought in – there have been six appointments made so far, with one or two additional appointments due between now and the New Year. Williams says he wants to continue to bring in fresh talent to change the company culture.

The new team includes Travis McKechnie, who has joined as operations director from modern Japanese restaurant group Roka – McKechnie previously work in the operations team for Gaucho between 2011 and 2015.

Jenna Bromage joins as brand and marketing director. She has experience building brands and establishing value-enhancing partnerships in the luxury, lifestyle and hospitality sectors for a range of companies including Richard Caring’s portfolio and Mondrian London/Dandelyan/Sea Containers/Rumpus Room.

While Ross Butler has joined as interim managing director, to assist Martin with the initial implementation phase. Butler was most recently at RMB Developments, but spent two years previously as international operations director at Gaucho (2014-2016).

“We have pretty much got the perfect team together now so we are ready to take the business on the next chapter on the journey,” believes Williams.

He says the strength of the new Gaucho team means he is able to have a relatively light touch operationally. “And likewise we have strengthened the team at M so I can remain omnipresent there also. We have brought in a second marketing manager and additional help with operations to strength the main two restaurants’ management teams.”

The business is also about to appoint a branding team. Williams says that while they know what Gaucho’s strengths and weaknesses are, “what we are looking to do is to evolve it, so it has a fresh new look”. To that end Investec and SC Lowy, have committed to “a significant seven-figure” capex facility to enable the refurbishment of all 16 restaurants over the next 12-18 months.

“We will be looking at each site, and how we make them individual. For example, at the O2 we are looking to put in a new bar, which will sit next-door to the normal Gaucho restaurant,” says Williams. “It will be a celebration of fashion, because the new outlet store is opening there, music, with it being the world’s most popular music venue, and everything that is Gaucho.”

Smithfield’s is also gearing up for a change. Williams is keen to evolve the offering to make it more in keeping with its meatpacking district heritage, with more of a focus on beef, and also beer. “We are working with some craft breweries to put a new offering in there, and to change the look and feel of it so it’s much more wet-led,” he explains. “While at Chancery Lane, we are looking at how we change that so it has much more of a wine bar feel to it. Each site should reflect the personality of its guests, and the demographic as well as the geography of the area.”

A new demographic

The very loyal, but “almost singular demographic” that love Gaucho – 40+ year old men – is also going to be given a bit of a shake-up. “I think we have to take learnings from what I have achieved at M, in so far as 50% of our customers are female and 50% are under 40, and become much more attractive to younger, and a more female demographic,” says Williams. Currently 90% of the people who dine at Gaucho eat steak, and he wants to drop that percentage down to around 70%, so that it celebrates everything Latin American, rather than simply being a steak house.

The process has already been started, with several vegetarian and vegan options added to the new menu, which officially launches today. The new line-up aims to celebrate the heritage of the business and its classic dishes, but the pricing has been reduced so it’s a much better value proposition, says Williams. While a ‘neuvo’ section has been added, inspired by the likes of Peruvian restaurant Lima, and chef Mauro Colagreco from Mirazur – who incidentally are two of several Latin American-inspired restaurant businesses coming to do pop-up and kitchen takeover events at Gaucho.

Williams is keen to have continuous programme of events going. This will also include a relaunch of its Argentine wine awards – something he did five years ago. Meanwhile the wine menu been revamped, and has doubled in size, which Williams says re-establishes it as the authority on Argentine wine.

The business has also introduced a new lunch menu, in order to attract a younger, and more office worker, demographic, which offers two courses for £20 and three for £24, which went live last week, and Williams says has resulted in a “20% increase in covers” since its introduction.

In addition, the business is now working with booking affiliates, which Williams says Gaucho has never traditionally done. “I think there has been a protection of the brand. It is ultimately a 40-year old business, with 24 years in London, that was predominately a family brand, and they were incredibly protective of it, quite rightly, up to a certain point, but that protection didn’t move with the times.”

You can now book in a variety of ways, and that will include set and bundle menus, that are perceived as better value for money, he says. Just visiting a website or calling to book is very one dimensional, he believes, therefore if you want to appeal to a multitude of demographics you need to “embrace the world of booking affiliates” and make them the route for guests to come and find you. “We want to spread the word about Gaucho to people who have never tried it before, or have previously found in inaccessible,” adds Williams. This means brighter and more female-friendly, and less clichéd cowhides and dark rooms.

What was never a problem was the people, he says. “The people within the group were the least of the challenges. There is still this great morale, given that they have gone through an administration process, and this inherent desire to please guests and give them an amazing experience.” An experience, which, if anything, needs to be a bit more relaxed and a bit more fun – certainly in terms of the service style, he says. He wants it to be a more celebratory venue to dine in.

He is also looking to trim head office costs and pass on the benefits to those staff working in the restaurants, by investing in them. “When you have a 50-odd restaurant business, and four interests overseas, your head office costs become dramatically different to the head office costs that I believe are appropriate for a 16-venue, predominately UK, restaurant group. So head office costs will be trimmed back dramatically to make us a leaner more profitable business,” he explains.

Alongside a desire to invest in people, he also says there is view that the business should be making less margin on food and drink. “We want to be less profitable in the restaurant, in so far as by investing more in staff levels and offering a better value food and beverage proposition, our belief is that will drive covers. That is a significant strategic change,” he says. “But I think the fact that ultimately it’s the rebirth of a new company means you don’t have to worry much about existing margins.”

M vs. Gaucho

So how does Williams see the future playing out? While he won’t give a concrete response to hints that he is considering merging M and Gaucho at some point, he does tell us: “We share, both the shareholders, Investec and SC Lowy, and myself, a vision that we have agreed to. It is a very long-term vision, about how the brand should evolve and where it should be in three to five years’ time,” he says. “We have made the first step of forming a partnership agreement, so see us able to carry out the first transitional steps of that.

“The challenge is to focus on the next four months, to make sure we have an amazing quarter four, and once we are past that we will see where we are. It’s with a shared view that we will be working together in the next three to five years, in whatever capacity that is,” he adds.