On the tail of an ongoing scandal around worker’s wages, former Master Chef judge George Calombaris announced yesterday that the MAdE Establishment restaurant group (Made Group) was placed into voluntary administration. Administrators from financial and restructuring firm KordaMentha were appointed as voluntary administrators of 22 companies in the Made Group, while the frozen yogurt operation Yo-Chi will remain unaffected. A total of 12 restaurants, including five fine dining restaurants and 7 souvlaki outlets, immediately ceased trading, putting the future of over 400 employees into question.

Aside from general factors that have been negatively impacting the hospitality industry in recent years, such as:

  • Increased labour and food costs;
  • Elevated industry competition;
  • The rise of on-demand services such as UberEats; and
  • A shift in consumer tastes away from fine dining;

a decline in trading across the businesses’ venues as a result of the employee underpayment scandal that rocked the Made Group back in July is cited as a major contributor to the Groups financial situation. Mr Calombaris admitted that the business had underpaid staff by $7.8 million, which has since been repaid to workers, in addition to a $200,000 contrition payment which they were ordered to pay by the Fair Work Ombudsman. While unions were outraged by the relatively small penalty, the Ombudsman stated that they took the Made Group’s financial position into account when determining the payment amount. Despite attempts at a major rebranding of high-profile venues such as The Press Club in Melbourne, the Made Group has experienced a decline in trade since the scandal, with the Australian public being left with a ‘bad taste in their mouth’ states Secretary of the Victorian Trades Hall Council, Luke Hilakari.

While the administrators expect that all creditors and staff should receive full payment of any debts, they are also investigating alternative operators for some of the poorly performing venues, and are engaging with other stake holders to realise the Group’s assets.

You can read more about other hospitality business who’ve entered voluntary administration here.