Thirteen years.That’s how long it took a plucky young chef from the Melbourne suburbs to build one of the most successful hospitality empires in Australia, alongside a lucrative media career.
It took a little over six months for George Calombaris to lose it all, with confirmation yesterday that Made Establishment has entered voluntary administration.
Filming is under way on the new season of long-running reality series MasterChef, without him at the helm after Network 10 abandoned contract renegotiations late last year.
And at the weekend, it emerged that Calombaris has been forced to list his Toorak mansion for sale, hinting at financial pressures both personally and professionally.
Now, news.com.au has been given exclusive insight from well-placed sources into how the business – hugely successful until very recently – fell apart so quickly and so spectacularly.
In 2017, rich-lister and entrepreneur Radek Sali bought into the Calombaris empire and brought with him a wealth of experience in business.
A routine audit and the implementation of more sophisticated accounting processes were what first uncovered something was very wrong with the payroll system.
Although, as one source revealed, “system” is a fairly generous term.
“Imagine one person with a calculator and a ledger book in a back office trying to sort out pays for (several hundred) staff and you wouldn’t be too far from what the set-up looked like,” the insider said.
In April 2017, Made Establishment calculated that its current workforce had been underpaid $2.6 million and publicly disclosed the issue. It immediately repaid 162 people and committed to working with Fair Work Australia to ensure the matter was properly finalised.
“The company tried to do the right thing, wanted to do the right thing,” an insider said. “George included.”
There was “no shying away from the fact that (Made) stuffed up … it had to make things right”, that source said.
After the self-disclosure almost three years ago, there was a minor and brief ripple in terms of diner numbers, but things settled.
As it seemed things were returning to business as usual, Made Establishment was working in the background with accounting firm KPMG and Fair Work Australia to fully examine the books.
It turned out that things were much, much worse than first thought.
The company was told that the full extent of underpayments was a staggering $7.8 million, affecting 515 employees over a six-year period.
In July last year, Fair Work Australia issued an enforceable undertaking that required the repayment of that amount – the company already had in the months prior – and a contrition penalty of $200,000 for Calombaris.
That minor ripple felt in early 2017 became a tidal wave that destroyed everything in its path.
“Almost from the moment the (undertaking with Fair Work Australia) was announced, people simply stopped coming to the restaurants,” a well-placed source told news.com.au.
“And they never came back. That was it – the business never recovered.”
Anything associated with Calombaris became toxic, the source said, keeping away diners who only months earlier would’ve lined up to get in the door. Noisy union protests outside prominent venues – and a couple of angry demonstrations inside them – scared away the rest.
For several months, Made Establishment management orchestrated an exhaustive effort to turn things around. There was no coming back.
Yesterday, the company entered voluntary administration and the majority of venues ceased to operate. There’s a hope that some may survive, but the future is very uncertain.
The mood among the 400 employees who are now out of work has been described as “a mix of anger, confusion and disbelief” – but not at Calombaris.
Instead, most feel they have been punished and paid the ultimate price.
There’s a sense too that Calombaris – who it’s said remains riddled with guilt over what’s transpired – has been dealt an overly severe punishment despite trying to do the right thing.
“His business is gone, his TV career is gone, his reputation is gone, he’s been forced to sell his house,” the source said.
“A number of other companies have been hit with underpayment (revelations) but none have paid a higher price than George. What’s the incentive to do the right thing?”
Calombaris began his hospitality business journey as a 26-year-old and things grew at an astronomical rate.
More and more venues were opened and Calombaris spent several months of the year filming MasterChef and juggling endorsement deals, cookbooks and appearances.
Amanda Evans is a human resources expert and said not prioritising robust business practices can land any business — small, medium or large — in hot water.
“Small to medium business owners are experts in their chosen craft, service or product, whatever it is they do, but perhaps not in the more complex side of the operation,” Evans, director of the firm Evans Faull, said.
“Navigating the employment landscape is complex and if you don’t understand it in the first place and keep up with changes you can lose a handle on it.”
“George puts himself out there, he always has, and rightly so – he’s very talented,” a source said. “He put his hand up and took responsibility. The cost of that is the collapse of the business because people wanted his head.”
Those close to the celebrity chef say the perception that his apparent greed led to the underpayments is most hurtful to him
“He’s very saddened. His first love was restaurants and cooking. Now he has nothing.”
Made Establishment declined to comment for this story.
In a statement shared on social media last night, Calombaris said: “Although we have all continued to work tirelessly and overcome the many challenges we have recently experienced, it is with deep sadness and regret that today Made Establishment has been placed into voluntary administration.
“On a personal note, the last few months have been the most challenging I have ever faced. At this time, while personally devastated, I remain thankful to my family, friends, the Made team, our loyal and regular customers.”