Gusto Nears Collapse as Casual Dining Crisis Deepens in the UK

Italian restaurant chain faces administration while Cabana owner eyes pre-pack deal

Gusto Faces Administration as Hospitality Sector Struggles

The UK’s troubled casual dining sector is bracing for another blow as Gusto, the Italian-inspired restaurant chain, is reportedly on the brink of administration. According to Sky News, the company, which operates 13 locations across the UK, is expected to undergo a pre-pack insolvency deal arranged by Interpath Advisory.

Gusto’s collapse follows mounting financial pressures on the hospitality industry—challenges made worse by rising taxes, inflation, and changing consumer habits.

Cabana Owner Steps In to Salvage Key Gusto Sites

Cherry Equity Partners, the owner of the Latin American-themed restaurant Cabana, is currently in talks to acquire the majority of Gusto’s restaurants. The acquisition would be carried out through a newly formed vehicle and is expected to preserve many of Gusto’s trading sites.

However, sources suggest that some job losses are inevitable, as not all sites may be part of the final deal. A formal announcement is expected in the coming days.

Private Equity Backing Not Enough to Save Gusto

Gusto is currently backed by Palatine Private Equity, but even with private investment, the chain has been unable to withstand the economic headwinds battering mid-market dining brands across the UK.

The company’s struggle mirrors a broader trend in the sector, with several well-known casual dining chains facing similar financial distress or closures over the past year.

Industry Warnings Mount as Closures Loom

Hospitality leaders have repeatedly warned of a looming crisis in the sector. Kate Nicholls, chair of UK Hospitality, recently said the industry could face a “jobs bloodbath” unless urgent relief measures are introduced. Rising business rates, wage pressures, and higher VAT have placed a strain on even well-established restaurant operators.

In a separate development, industry veteran David Page, former CEO of PizzaExpress, is raising £10 million to seize acquisition opportunities in the sector. He plans to take control of Tasty PLC, which owns Wildwood and dim t, and rebrand it as the Bow Street Group. A share placement for the deal is expected to close this week.

A Tipping Point for UK Casual Dining?

The looming administration of Gusto reflects a sector in flux, where mid-sized restaurant chains are squeezed between rising costs and reduced customer spending. Pre-pack insolvencies, like the one being prepared for Gusto, are increasingly being used as a tool to salvage value and jobs—but they also highlight how fragile the operating environment has become.

With inflation easing only marginally and interest rates remaining elevated, restaurant operators across the country are facing tough decisions about expansion, pricing, and staffing.

Conclusion: A Wake-Up Call for UK Hospitality and Investors

The likely collapse of Gusto is another stark reminder of the deep structural challenges in Britain’s hospitality sector. While the proposed deal with Cabana’s owner may protect some jobs and locations, the industry as a whole remains under immense pressure.

For investors, landlords, and policymakers, this is a clear signal that long-term recovery requires more than short-term fixes. Strategic support, targeted tax relief, and flexible investment models may be key to preserving what’s left of the high street’s once-thriving dining scene.

As Gusto prepares for a potential handover, its story becomes yet another chapter in the ongoing transformation—and turbulence—of UK casual dining.

Sources: (SKY.com, Reuters.com)