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Hospitality bosses are blaming Fair Work's 'name and shame' wage theft campaign for the collapse of George Calombaris' restaurant empire

Patrick Durkin, David Marin-Guzman and Liz Main, AFR

The hospitality sector is blaming the Fair Work Ombudsman's "name and shame" campaign for driving the collapse of George Calombaris' restaurant empire with warnings more jobs are at risk.

Around 400 staff are out of work after 12 restaurants – which include the Jimmy Grants chain, Hellenic Republic and Elektra – shut their doors on Monday.

Administrator Craig Shepard said the $7.8 million wages underpayment scandal was a big factor in the collapse with the number of diners "50 per cent down on where they were expected to be" in the wake of the scandal.

"You read restaurant reviews and they had fantastic reviews but people haven't turned up," Mr Shepard told a press conference in Melbourne on Tuesday.

The head of Australia's restaurant industry body believed the collapse was in part due to the "heavy-handed enforcement" of pay rates and entitlements by the FWO, despite the Calombaris group self-reporting and fully repaying staff.

"The industry is facing a perfect storm: business inability to raise prices while wages, rents and food and beverage costs, utilities have all skyrocketed," Restaurant and Catering Association chief executive Wes Lambert said.

"You add the bushfires, the drought and the coronavirus virus," he said. "Then when you add on top of that a regulator naming and shaming businesses that are coming forward and reporting underpayments – this is what happens."

Ai Group chief executive Innes Willox was fired-up in a strongly-worded criticism directed at the watchdog, governments and unions for a well-meaning but out of control campaign.

He called on the federal government to quickly step in with foreshadowed underpayments legislation to provide certainty and take the heat out of the debate.

“The unions, in particular, through relentlessly overinflating and politicising the issue and branding employers as ‘thieves’, should bear much of the opprobrium for the sad outcome in the Calombaris case and others."

"Anti-business rhetoric has reached fever pitch, risking jobs and investment and federal and state governments were supporting a divisive agenda by parroting overly emotive union terms such as 'wage theft'," he said.

Quick sale

KordaMentha administrator Mr Shepard said he hoped to secure a quick sale of assets from the 12 collapsed restaurants owned by the former Masterchef judge's Made Establishment group and backed by rich lister Radek Sali, as early as this week.

Prominent British chef Matt Wilkinson is among as many as 15 parties who have expressed an interest in buying the collapsed business' assets although the Yo-Chi frozen yoghurt chain will continue to trade.

Mr Wilkinson – the renowned chef-owner of Pope Joan – opened Crofter Dining Room & Bar late last year on the site of Calombaris's Lygon Street version of Hellenic Republic.

"Matt's already said that he'd like to be trading by Friday. That's achievable in my mind," Mr Shepard said.

"In the circumstances it's going to be difficult to get a premium," he said. "The more tension in the deal the higher the price will be."

While the company rebranded many of its prestige restaurants including the Press Club after the wages scandal, the move was clearly not enough to save the business.

Staff found out they would no longer have jobs in an email sent using the company's database at around 5pm on Monday.

Staff were paid their final wages and superannuation over the weekend, after Mr Sali, the former boss of Swisse Wellness, injected more funds into the group – but leave entitlements for around 100 ongoing staff are yet to be paid.

Mr Calombaris is a major shareholder in the company, owning just under 46 per cent through a private company while sole director Mr Sali owns 46 per cent through companies owned with his wife.

An FWO spokeswoman said the regulator considered a range of factors when determining its response, including "the scale of workplace law contraventions and deterring others from engaging in unlawful behaviour".

"It is standard practice for the Fair Work Ombudsman to announce formal enforcement outcomes such as court-enforceable undertakings."

Food critic Jill Dupleix warned she expected more restaurant businesses would be forced to shut down this year due to a deadly combination of complex penalty rates, high rent and dwindling tourism due to the bushfires and coronavirus.

"The entire industry is screaming that weekend penalty rates are crippling them, and that they struggle with incredibly complex award rates for overtime. The hospitality industry is heading for a difficult time in 2020 for sure," Ms Dupleix said.

This story originally appeared in the Australian Financial Review. Read the original story here.