George Calombaris’ Made Establishment had not turned a profit in three years’ according to a report released by administrators KordaMentha Restructuring on 10 March.
The report showed the hospitality group had lost $20.7 million in the four years before it entered voluntary administration on 10 February.
Sole director Radek Sali sunk $11.5 million into the business through 15 advances in an effort to keep the companies afloat after news of the $7.8 million in underpayments broke in July 2019.
Across Made Establishment’s portfolio its fast casual chain Jimmy Grants and Hellenic Republic venues were the worst performers. Jimmy Grants expansion into Sydney in 2017 resulted in failure, with the company withdrawing from the market in mid-2019 after opening three venues. The Melbourne outlets didn’t fare much better: St Kilda had losses of $2.7 million, Eastland $2.1 million and Ormand $1.3 million. In 2016, it was reported Sali had set up a $250 million dollar fund to finance the chain’s expansion from five outlets to up to 40.
The better performing venues were sold in the wake of Made’s collapse. Jimmy Grant’s Emporium location, the only one to turn a profit this financial year to date, and its Fitztroy outpost, which recorded relatively small losses of $300,000 were snapped up by Melbourne souvlaki brand Stalactites Group. Both stores are set to reopen as Hella Good souvlaki outlets in mid-2020.
Rebranding efforts for three Hellenic Republic venues as well as The Press Club did little to abate the decline in trade that came after the extent of its underpayments came to light.
Hellenic Republic Kew (rebranded to Vita Ristorante) and Williamstown (rebranded to Hotel Argentina) lost $2.7 million and $2.8 million respectively between July 2016 and the group’s collapse in January. The Kew location’s FY19 sales declined 44 percent relative FY17, while Williamstown’s declined 26 percent.
Brighton and Brunswick East (rebranded to Crofter Dining Room and Bar) have been sold, with the latter to be transformed into an American-style BBQ joint.
Calombaris’ flagship venue The Press Club (rebranded to Elektra) experienced a sales decline of 28 percent in FY19 relative to FY17, with the report showing a cumulative loss of 900,000 before tax for the period between July 2016 and January 2020.
In some good news for the fallen empire, KordaMentha cleared Made Establishment of trading while insolvent, saying there was “little merit in the claim”.
Administrators Craig Shepard and Leanne Chesser are now recommending the companies that make up the group be liquidated, with total liabilities of $23.7 million as of 31 January.
Employees left in lurch
The Fair Work Ombudsman has made four more enquiries since Made Establishment’s collapse was announced, with 364 employees including 102 permanent staff and 262 casual staff owed a total $1.34 million in entitlements.
Some employees have notified the administrators of discrepancies in their entitlement calculations. It’s anticipated an independent assessment of claims will be completed by the second creditors meeting on 17 March.
It is not expected there will be enough funds after liquidation to cover outstanding entitlements, with KordaMentha already working with the government’s Fair Entitlements Guarantee scheme to establish accounts with employing entities. Once the liquidation has been finalised affected employees should have their claims assessed quickly.