Administrators at Deloitte have said Gaucho’s 16 other sites will remain open while a buyer is sought for that part of the business.
Matt Smith, joint administrator at Deloitte, said: “Unfortunately the Cau brand has struggled in the oversupplied casual dining sector with rapid overexpansion, poor site selection, onerous lease arrangements and a fundamentally poor guest proposition all being factors in its underperformance.
“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.”
Mr Smith added that Gaucho was still trading well and had strong customer loyalty.
The restaurant group has 1,305 employees in total: 540 at Cau, 714 at Gaucho and 51 at the company’s head office.
The announcement comes a day after Sky News revealed that Gaucho had filed a notice to appoint administrators.
Gaucho is the latest in a lengthening line of casual dining chains facing tough conditions on the high street.
The steak restaurant group joins the likes of Prezzo, Byron and Jamie’s Italian, which have all shut restaurants and axed hundreds of jobs this year.
London food chain Hummus Bros also went into administration this summer.
Robert Hayton, head of UK business rates at real estate adviser Altus Group, said: “There has been huge growth in the casual dining market with restaurant numbers up 16% overall since 2010.
“The race for space has pushed up rents impacting on rateable values.
“Extra tax for business rates coupled with rising food prices and staff costs through increases in both the national and minimum wages are creating a potentially lethal cocktail as margins are squeezed.”