First published on 18 Jul 2012. Updated on 29 Aug 2012.
Things are looking pretty grim for high-end dining in Sydney. The last eight weeks have seen the closure of Manly Pavilion, Berowra Waters Inn, the Ad Lib Bistros and five separate venues under the Bécasse Group after they went into administration, and other venues like Cotton Duck and Montpellier Public House have also pulled up stumps of their own volition. Rapid expansion, crippling overheads and a drop in customer numbers have been blamed as these high-profile venues fold – though this is all speculation at this stage – leaving a gaping hole in the restaurant scene and a stack of unpaid debts behind them.
When a venue does go under, secured creditors like the ATO and banks are the first to get paid, followed by a list of preferential creditors that, fortunately, includes staff. But once those debts are settled there is little left over to pay the people who have been providing the seafood, meat, fresh produce and liquor to these venues.
Jules Crocker, owner of Botany-based Joto Fresh Fish, has seen his fair share of venues go broke in 14 years supplying Sydney restaurants. “There have probably been 30-odd that I’ve been a supplier to, including Manly Pavilion,” says Crocker. “The really hard part is that there is little or no recourse. In the last financial year there is $140,000 in bad debt owed to me, but there’s never anything left to pay the unsecured creditors with.”
James France of liquor distributor Vanguard Luxury Brands knows only too well the problem of too many creditors and not enough cash to go round. He supplied Manly Pavilion and 13B, both of which have closed in the last six weeks. In the last four years he says he is yet to receive any financial restitution from the five customers that have gone bankrupt. “I have never had a single cent back from any of them. You don’t get any warning and all of a sudden the doors are closed and you’re screwed.”
Of course, even in dark financial times, France insists that there’s a right way to handle the collapse of a business. “When the Manly Pavilion closed they were so upfront and apologetic about it. They sent me an email that said my unused stock was ready for collection. It was very sad that they closed but they handled it in a very professional, honourable way.”
But this experience is proving the exception rather than the rule. For boutique Victorian beef producers Warialda Belted Galloways, the Bécasse group had been their first Sydney clients. “It was a really big thing for us because they were taking whole carcasses – we process 12 carcasses a month, so we’re really little,” says Lizette Snaith who owns the small business with her husband, Allen. While larger suppliers may be able to absorb the losses associated with administrations more easily, the Snaiths have found themselves out of pocket as well as out of product following the Bécasse closure.
“When they went into receivership they still had some of our product but we couldn’t get it back. We tried but the administrators were in charge of everything and they wouldn’t release it,” says Snaith. (Time Out has reached out to Bécasse owner Justin North for comment and will update this piece if/when we hear back.) “They’re three-year-old cattle, so it takes us four years to get that carcass, with gestation and all the rest of it. So it’s not like, ‘We’ll have some more carrots next week.’ It’s a unique sort of product.”
The suppliers say operators should take a more transparent approach to their financial positions. “Suppliers should be somebody that you have a partnership with, that can help you out and help you grow your business, not somebody that you steal from,” says France. “If they know that something bad is happening they should be up front about it. It’s a small industry so if you go around ordering stock that you have no intention of paying for then word gets around very fast.”
And in light of the recent spate of closures, are suppliers worried about the future of Sydney’s fine-dining scene? France says things are not looking good. “To have two in the last month and the spectre of possible further closures ahead, it tells me that this is a trend, not just a few unlucky people.”
But seafood supplier Jules Crocker is taking a more optimistic view. “The Sydney dining scene is strong and healthy. There have been a few aberrations I think, but these restaurant closures aren’t indicative of what’s going on in the market. We supply seafood to between 150 and 230 restaurants on any given day and they’re steady. In my opinion the two notable sets of closures in the last six weeks came about because they were trying to build empires instead of just being chefs.”