The shock exit of Gaucho Group’s long-serving CEO Zeev Godik yesterday, hot on the heels of a change of chairman, has left a number of questions unanswered. Dominic Walsh looks back at Godik’s long tenure and asks what the news means for the sector.
When Zeev Godik stepped down from his role as chief executive of Gaucho Group yesterday, 41 years after he opened the first branch of the steak house chain in Amsterdam, it marked the departure of one of the sector’s longest-serving CEOs.
It also came after I had filed a first draft of this column for MCA’s print edition, initially based around the decision by Luke Johnson to step aside as chairman to be replaced by former Asda chief executive, Paul Mason. I asked in the original piece whether Godik – or Mr G as he is known to loyal employees – would decide it was time to finally hand day-to-day control of his baby to a new CEO. I did not expect the question to be answered before the article had even been published!
Reflecting on his journey with Gaucho, it was inevitable that, given his longevity, Godik would have been through numerous ups and downs. Having built the business to 18 restaurants he floated it in London in 1999, only to take it private again for £13.2m three years later after a string of profit warnings. In 2005, following the sale of all but one of its Dutch and Swiss outlets, its founder led a £23.5m management buyout backed by Barclays Private Equity. Then just 18 months later, Phoenix Equity Partners backed a fresh buyout valuing the business at £55m.
In 2007 the tycoon decided to make a return to the public markets by launching a proposed listing in London that would have valued Gaucho – by now down to nine restaurants in London and one each in Manchester and Amsterdam plus three in the pipeline – at £100m, or about £115m including debt.
Valuation concerns
Market volatility was blamed for the decision to pull the float although in truth there were concerns over the valuation of c£10m a unit. That said, within weeks Godik had sold a minority stake to Intermediate Capital Group in a deal valuing the group at an estimated £120m. Under ICG’s tenure, Godik opened Gaucho sites in Buenos Aires, Dubai and Hong Kong and in 2010 launched a sister chain called CAU “focusing on cuisine from Buenos Aires” (ie more steak). By the time the business was sold for c£100m to yet another private equity firm – Equistone Partners Europe (the second time it had invested in Gaucho after a holding from 2005-2006) – the group had 14 UK Gauchos and three overseas, plus 16 CAU units in the UK and one in Amsterdam.
Still with me? Only four months later, in April 2016, serial sector investor Luke Johnson arrived, becoming non-executive chairman and investing “a substantial sum” in backing the business. He also declared: “I see a great future for Gaucho and its new sibling CAU, both here and abroad.”
His enthusiasm for chairing the company did not last, however, and this month Johnson handed the reins of the company – by now 19 Gauchos and 23 CAUs – to Mason, a man with consumer-facing experience oozing from every pore. His CV includes spells with New Look, Levi Strauss, Matalan and Somerfield, while he is currently chairman of Dr Martens, the bootmaker.
So why did Cool Hand Luke step down as chairman after 18 months? Although the an-nouncement does not enlighten us, my suspicion is it may well be linked to persistent rumours over trading at CAU. While the core Gaucho continues to perform very solidly, by all accounts its younger sibling, as Johnson called it, has been having a bit of a nightmare these past few months. While the former Pizza-Express chairman is not one to shrink from a challenge, my guess is that dealing with CAU was probably taking up a disproportionate amount of his time – time he simply did not have given the huge array of investments, chairmanships and other non-executive directorships he has, not to mention his Sunday Times column; it takes time to craft an interesting column, you know!
Extensive experience
Don’t forget also that, experienced and knowledgeable as he is, Johnson cannot match his successor’s executive experience at the operational coalface. As Godik referenced in the announcement of his appointment, Mason “brings extensive hands-on experience in the consumer and retail landscape.”
Not that Johnson or Godik are abandoning ship at Gaucho. They both remains investors in the business with Johnson promising to continue advising on the growth strategy and Godik pledging to remain involved to ensure a smooth handover to his successor.
To me, it sounds like the former Asda boss will have his work cut out and it will be interesting to see who he drafts in to fill Godik’s shoes.
The departure of such a constant figure in the industry on the same day that Alasdair Murdoch stepped down from the same role GBK also begs the inevitable question – who could be next?
■ Dominic Walsh is a business reporter at The Times covering the leisure, tobacco and drinks industries
