For 65 years, the Soho restaurant has been the place where Labour lunches. But next month might see it shut

The Gay Hussar is among the most celebrated restaurants in London but its fame rests not so much on the quality of its chilled wild-cherry soup and its goulash, but on its reputation as the beating heart of political gossip.

The Hungarian restaurant in the centre of Soho has played host to generations of politicians, many drawn from the left, including Aneurin Bevan, Michael Foot, Tom Driberg, Ian Mikardo and Barbara Castle. It is also rumoured to be where the Tory wets fruitlessly plotted the overthrow of Margaret Thatcher in the early 1980s.

But after 65 years as a hotbed of political plotting, backstabbing, deal-making and gossip, it is due to close its doors for the last time in June.

A combination of spiralling overheads, including business rates and rent, and a slump in lunchtime bookings – with politicians no longer prepared to trek over from Westminster for inevitably lengthy alcohol-fuelled lunches – has sounded the death knell for the eccentric establishment. Its owner, Corus Hotels, is closing the restaurant and selling the lease. Distraught staff have been told to expect to serve up the final meals on 21 June.

The three-storey restaurant in Greek Street staved off a threat of closure in 2013 when Corus – the UK arm of a Malaysian conglomerate that also owns Laura Ashley – put it on the market. That led to 160 politicians and journalists banding together as the so-called Goulash Co-operative, requiring a minimum investment of £500, and offering to chip in to buy it.

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In the end, with no decent offer on the table, Corus agreed to keep the restaurant open, giving it a minor rebrand as GH Soho, although with the restaurant’s traditional interiors and old-school meaty menu left largely unchanged.

But over the past few days the restaurant’s “valued customers” – including current and retired journalists from the Guardian and Observer – have been discreetly informed that falling lunch bookings and Corus’s decision in December to raise the rent by 30% mean the business is now unsustainable and is being closed. Meetings are being held with waiting and kitchen staff about redundancies. Although the news has not yet been officially announced, a statement is expected in the coming days.

The Goulash Co-operative is again attempting a rescue – galvanising its membership with a new fundraising drive to add to the £150,000 already raised, and launching a plan not only to save the restaurant but to create an improved venue that better reflects changing tastes and trends.

“We believe now is the time to create a new Gay Hussar, and are in talks with possible partners who agree with us that this unique establishment must be saved,” said the Goulash Co-operative’s spokesman John Goodman. “It’s showing its age. We have lots of exciting plans to renovate it, including installing a dumb waiter and a downstairs toilet.”

Facebook Twitter Pinterest Since 1953 the Gay Hussar has played host to generations of politicians, including Peter Mandelson. Photograph: Heathcliff O'Malley/REX/Shutterstock

Since it opened in 1953 it has been a haunt and popular watering hole of politicians, writers and artists. Devoted regulars have included the Labour grandees Roy Hattersley and Michael Foot – who celebrated his 90th birthday there – and more recently Gordon Brown. Private Eye editor Richard Ingrams had a regular table on the first floor, where he would bellow out whispered titbits from his informants. Election victories have been celebrated there and sorrows and defeats drowned with copious amounts of bull’s blood.

It was founded by Victor Sassie, son of a Swiss father and Welsh mother, who trained for the restaurant trade partly in Hungary and opened his own establishment, the Budapest, in London in 1939. During the second world war, he worked for British military intelligence, and for Robert Maxwell after it. Sassie, who died in 1999, sold the Gay Hussar to the Restaurant Partnership in 1988.

Over more than six decades the traditional decor of the open-plan ground-floor restaurant and two crimson-hued private rooms – connected by a narrow staircase – has barely changed, with every space and surface stuffed with books, caricatures and pictures.

Downstairs, the wall-to-wall framed Martin Rowson cartoons of the political elite’s great and not-so-good – officially “on loan” from the artist – have been expanded to include the new generation of MPs, even if many choose not to dine there. The ground-floor dining room accommodates up to 40 diners, while two private rooms upstairs (with 25 and 12 covers) give scope for more discreet exchanges behind closed doors, over the dark wood tables and behind thick velvet drapes.

Mark Seddon, the journalist and former Tribune editor and a member of the Goulash Co-operative, said: “There’s a lot of love for the place and we have plenty of ideas for reviving it. We think it has potential for literary events. It’s all very exciting.”

Neil Kinnock, the former Labour leader, said: “The action of Corus Hotels is deplorable and must be resisted. Supporters of the Gay Hussar have already raised a large sum with big and small donations. Now we must do that again to give us a fighting chance of securing the future of a restaurant which is part of political history.”

The Gay Hussar’s general manager John Wrobel, who has ruled the roost there for more than 25 years, said: “This is the end of an era and a big shock for me personally. The lunch trade has taken a dive, and although we have put lighter options on the menu and offered special deals, it has not led to the boost we needed. Yet evening trade is always very busy and we are getting great reviews on TripAdvisor and with a younger clientele. With all the development around Crossrail [the new rail link] in the area it would be a shame if we were not able to take advantage of the increased footfall.”

Wrobel is not planning a farewell party on 21 June. “We will go quietly with a dignified ending,” he said. “There is nothing to celebrate.”