Sydney pub baron’s audacious take on Melbourne’s food scene hits a $100m brick wall
Hospitality heavyweight Justin Hemmes has been hit with an estimated $100m Melbourne restaurant bill at his Flinders Lane venue. See where the millions of dollars went.
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Sydney pub baron Justin Hemmes’ move into Melbourne has hit a $100 million brick wall, with plans for his flagship Flinders Lane restaurant stalling.
When News Corp visited the site this week, it was locked up and no work was going on, despite a planned opening in 2024.
It is understood there has been no work on the site since late last year.
Last week Mr Hemmes revealed he had put his $1.5 billion Ivy redevelopment in Sydney on hold.
The hospitality heavyweight spent an estimated $37 million on the historic Tomasetti House in Flinders Lane in 2021, paying more than double what it sold for eight years earlier.
Mr Hemmes did not return calls from this newspaper about the Flinders Lane project but sources claim that Mr Hemmes has already spent $10 million on remedial works, with that bill to hit up to $15 million to bring the building up to the modern safety code.
A restaurant renovation was likely to cost at least another $40 million, bringing the total bill close to $100 million.
The costs raise questions about the profitability of running the proposed Chinese restaurant on the site unless revenue can be found from alternative sources such as a hotel or office leasing.
Tomasetti House, which is next door to a seedy sex shop, was boarded up last week.
The basement bar and restaurant was strewn with red-and-white hazard tape.
A shoe shop in the seven-storey building that was constructed in 1853 has moved out.
“It’s a ghost town. We’ve been Googling it to find out what’s happening, we need something down this end of Flinders Lane,” a nearby shop worker said.
A construction worker on a separate site nearby said: “Nope, I haven’t seen a soul. I’ve seen no one around there.”
Mr Hemmes pledged that Tomasetti House would become a posh Chinese restaurant run by hot chef Jowett Yu that would open in 2023.
The move was then pushed back to 2024.
Mr Hemmes was exuberant when announcing the purchase of Tomasetti House.
“Melbourne is a very special city, with a unique energy and an inimitable soul,” Mr Hemmes said in 2021.
“Its local hospitality industry is one of the best in the world; brimming with creative culinary talent and supported by a passionate community of diners.
“We are honoured to open our first venue in Melbourne, and cannot wait to work alongside so many local industry greats”.
However, Mr Hemmes was still waiting, with almost certainly no chance of opening in the next 12 months given the current state of refurbishment.
The City of Melbourne granted planning permission for work to begin in September, but there was no sign of activity at the site on Friday.
Mr Yu said this week he was “still working on the project” but declined to comment further.
However, he told Good Food two years ago that the Melbourne plans were “exciting and daunting”.
“I’m not sure how the public in Melbourne will receive the space and the food… But we just have to give it a go,” he said.
Mr Hemmes also splashed out on a restaurant in Meyers Place, near the top of end of town in Melbourne in August, 2023.
The existing Argentinian restaurant San Telmo remains a tenant in that building.
He has also been hit with a $129 million class action claim for underpaying up to 14,000 employees by as much as 20 per cent over a decade. That dispute, which centred around the wording of an employment award, was settled in March with an $18 million payout.
Mr Hemmes’ purchase in Flinders Lane marked his first major stake in the ground in Melbourne after building an impressive hospitality portfolio in Sydney including restaurants Mr Wong, Mimi’s and Felix.
His Merivale group has already taken over the Lorne Hotel, bringing an outlet of his Bondi Beach based Totti’s restaurant chain to Victoria’s surf coast.
High-end hospitality fit out construction company Chroma Group was behind the Totti’s upgrade at the Lorne Hotel.
The company was understood to have been signed on to work on Tomasetti House.
A Chroma Group employee said “you need to talk to Justin” when asked about the delays on Friday.
Mr Hemmes did not respond to calls or texts on Friday asking questions about his plans in Melbourne.
However company documents for Hemmes Trading Pty Ltd show that his restaurant business lost more than $9 million last year.
The losses were on turnover of $580 million, with “cost of sales”, which includes food ingredients and alcohol, being $117 million.
The losses in the company were linked to $230 million in “management fees” which the restaurant company paid to “Hemmes Administration Trust”.
Company documents for the 2023 financial year note that the trust had to provide a guarantee “letter of comfort” to the restaurant business because it had more debt than assets.
“Funds are at call and the Group is able to demand repayment at short notice should funds be required,” page 9 of the Hemmes Trading financial report states.
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Originally published as Sydney pub baron’s audacious take on Melbourne’s food scene hits a $100m brick wall