Burger Republic falls into liquidation amid hospitality crisis

Some of Adelaide’s best-known eateries and hospitality spots have closed as fears mount for an industry in crisis. See what else shut in January.

Business insolvencies in South Australia dipped in January, but hospitality operators are feeling the pinch with several well-known establishments closing their doors amid ongoing challenges facing the industry.

Of the nine local businesses that fell into administration or liquidation last month, four operated in the hospitality sector, including iconic Port Adelaide pub the Port Admiral Hotel and Hindley St whiskey bar Suzie Wong.

Burger Republic’s two burger bars in Hyde Park and Henley Beach have also closed after falling into liquidation, with the assets of the company being sold off to repay creditors.

The company’s liquidator, Andre Strazdins from BRI Ferrier, said new owners took over the business early last year but were forced to close the doors amid a fall in customer numbers and trade.

“Hospitality is really struggling. The high interest rates, inflation – people have got less disposable income which then pushes out to the discretionary spend,” he said.

“And usually the first one to be hit as soon as that discretionary spend tightens up is the hospitality industry. They’re the ones that get hit hard.

“You look at Burger Republic – two great locations in Hyde Park and Henley Square – there’s a lot of people down there but they just don’t seem to be spending the money.”

ASIC figures show the total number of SA business insolvencies in January – a typically subdued month of insolvency activity – was significantly lower than the 22 insolvencies recorded in December and 16 in November.

A Burger Republic burger. Picture: Keryn Stevens

Oracle Insolvency Services partner Nick Cooper said the rate of business failures was likely to increase in the coming months as the ATO clamped down on businesses with tax debts racked up during Covid.

“The ATO has been issuing director penalty notices which can make directors personally liable if they don’t pay the company’s debt,” he said.

“But the other thing is that the ATO are now very much ramping up legal actions – they’ve issued quite a number of winding-up applications and bankruptcy actions, whereas between the beginning of Covid and now they’d been very quiet on that front.”

The Port Admiral closed its doors in January after falling into liquidation. Picture: Mike Burton

Mr Strazdins said 2023 was shaping up as a challenging year for business operating across a wide range of industries, including hospitality, construction and transport services, and signs of mortgage stress were also emerging on the back of a string of interest rate rises in 2022.

“People have been hit by fuel prices, that eats into discretionary spend, but it is also affecting the transport industry because they’ve got to pass that on to the consumer,” he said.

“The building industry is still struggling – there’s a lot of work but there’s also a lot of people committed to fixed price contracts dealing with the higher cost of building materials.

“And then there’s the impact of the floods. Certainly the Riverland’s tourism is going to be hit with the recovery. I think we’re in for a tough year.”

Outside of hospitality, other notable business insolvencies in January included medicinal cannabis venture BBS Pharmaceuticals, which is majority-owned by VALO founder and chief executive Aaron Hickmann.

The company was licensed to produce medicinal cannabis products from its growing facility in regional South Australia and had plans to sell to both domestic and overseas markets.

However, after a series of delays and legal battles, the project stalled and administrators were appointed.