Financial troubles for some of the best restaurants in Australia

Date: 12-09-2011

Financial troubles for some of the best restaurants in Australia. How many other restaurants are struggling.

John Leathlean in the Weekend Australian on September 11, wrote about financial troubles for two top Australian chef/restaurateurs. Tony Bilson has had two of his companies put into administration because of debts owed to the State Revenue Office. Dietmar Sawyere`s Berowra Waters Inn and Ad Lib bistro called his creditors and suppliers warning that voluntary administration for his companies is a serious possibility. This comes just after Gordon Ramsay`s Maze restaurant was placed into administration.

Bilson hopes to trade his way out of administration, which was caused by an unexpected $400,000 payroll tax liability. “It`s a very odd set of circumstances relating to shared liability by different companies,” he said.

What lessons can be learnt from these high flying restaurants?

The administer also said that if the structure of Tony Bilson`s companies had been different, the issues with the SRO would not have put in jeopardy his other, profitable businesses. This underlines the importance of ensuring that you have the right company structure for your business. There is also the question of how the $400,000 debt to the SRO arose? No one likes surprises from the Tax Man, so keeping on top of the reporting and understanding of the taxation is important, because without the proper planning for it, it can put you under.

Dietmar Sawyere`s restaurants, Ad Lib and Berowa Waters Inn are both profitable he stated, but he had opened a second Ad Lib in Double Bay which closed recently, putting pressure on the other business. It is commendable that Sawyere has spoken to his suppliers, letting them know about the difficulties with Ad Lib, rather than just putting it into administration.

One of his suppliers told the Weekend Australian, “I reckon this is just the tip of the iceberg. There is a lot of hype out there about how buoyant and healthy the restaurant scene is, but the cold, hard reality is that if you scratch beneath the surface you`ll find a lot of businesses very close to going under.”

Whilst it is easy to look at reasons why restaurants are doing it tough now, with GFC II, interest rates, poor consumer confidence and rising unemployment, I think those that are doing it tough need to go back to basics and look at what they need to do. Prepare great food, serve it with great service and make sure that everyone knows about it.

We can`t really help with cooking the food, by we certainly can help with the marketing and getting the word out about great restaurants and take aways. Marketing for a business that isn`t doing a good job will only accelerate the decline as unhappy customers spread the word about a bad business, but for businesses with great food, it can make a large difference by increasing the number of customers, the frequency with which they purchase and the amount they spend. These are the ingredients of a profitable hospitality business!

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