Heston Blumenthal’s Dinner restaurant in Melbourne: What what led to its collapse
Before creditors meet to discuss Heston Blumenthal’s failed high-priced eatery at Crown in Melbourne, we can reveal why the world famous chef’s golden goose was burnt.
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Angry creditors will pour over the books of Heston Blumenthal’s Dinner restaurant in Melbourne at a liquidators meeting at Level 18 of 600 Bourke Street on Monday to make sense of the financial car crash.
But industry insiders say the high-priced eatery was a $12 million black hole in lost profits, with experts stunned the management burnt a golden goose.
The Michelin-starred chef, who fused cooking with science, has seen his namesake restaurant at Crown collapse, with staff owed more than $4.5 million in unpaid entitlements.
But Blumenthal, who did not have shares in the company that owned the restaurant, was paid by Crown $ 1.9 million AUD each year to promote the eatery and for the use of his brand, according to a liquidators report.
However, despite charging more $295 per head for a set menu, the restaurant first made a profit in November 2019, just before it went bust.
The restaurant made an $18,000 AUD profit that month, and $138,000 in December 2019, while it did just marginally better than break even in January 2020.
“The balance of the Company’s deficiency (loss) of circa $4 million represents trading losses incurred during the 4 years of the company’s business,” the liquidator’s report said.
A News Corp Australia investigation has found that the restaurant was turning over up to $15 million per year.
Other restaurants of similar size and turnover make a profit of between $3 and $4 million each year in Melbourne, industry insiders say.
“The restaurant has underperformed since day one. Given the revenues they were generating, they should have been making at least $3 million profit,” a source said.
“Their local management had no say in how the business was run so it never adapted to local conditions.
“There was a revolving door of senior management from the UK.”
Dinner By Heston Blumenthal opened in Melbourne in October 2015, meaning the company should have made more than $12 million clear profit based on similar restaurant’s returns, instead of ending up millions in the red.
Tipsy Cake Pty Ltd, which owns the restaurant, this week blamed Crown for its woes, saying it gave the company the blueprint for how to pay wages and tried to get them to cough up some of the unpaid entitlements.
But Crown hit back saying that Heston’s restaurant was a tenant and noted that Tipsy Cake didn’t have enough cash to cover its costs.
Blumenthal has been on top of the cooking world for decades, with The Fat Duck in Bray, England, named the World’s Best Restaurant in 2005.
But this Melbourne debacle has him joining the likes of Jamie Oliver who had to shut down his UK restaurants last year and Gordon Ramsay who was forced to shut his London restaurant Maze after a multi-million loss.
It has been a tricky couple of years for Blumenthal, with a fire forcing the closure of his London branch of Dinner between June and December 2018.
And he stuck his foot in his mouth with sexist comments about female chefs, which has been widely noted in London’s food scene.
“I have always employed female chefs, but historically and ultimately, the body clock starts working,” the 53-year-old told the Economic Times in October last year.
“It’s evolution, and it is one thing to have a 9-5 job and quite another to be a chef with kids.
“So, that makes it difficult. [The physical strain of lifting] heavy pots and pans.”
He added that men get “insecure” when women stand up for themselves in the kitchen.
James Hansen, the associate editor of Eater London, which keeps tabs on the city’s food scene, said Blumenthal was in danger of becoming irrelevant.
“Heston is best known to a UK general audience as a sort of mad scientist chef caricature who is on TV a lot, who makes snail porridge and obsesses over cooking a steak perfectly; his recent returns to the limelight, not all of them very successful, appear to be bids to get himself back in the public eye.
“His sexist commentary about women in kitchens didn’t go down well, and Ashley Palmer-Watts’ departing the group is a sign for some in the industry that things are really going awry.
“But that’s industry talk. To a non-restaurant-person, as it were, I think they’re just more likely to have forgotten who he is and not really know why the Fat Duck and its ideas were so revolutionary.”
Blumenthal opened The Fat Duck in 1995 after he had purchased the run-down old pub with his former wife Zanna, whom he divorced in 2017 before marrying Stephanie Gouveia - 20 years his junior - in 2018.
When money was tight in the early days of The Fat Duck, he did a deal with nearby Reading jail to get prisoners near the end of their sentences to work in his kitchen on day release, according to a speech at the University of Bristol.
His scientific cooking creations, including bacon and egg ice cream made him a household name and TV favourite with his iconic flair.
Blumenthal has also been a regular paid guest presenter on Australia’s MasterChef, which he was recently ousted from, as well as British television.
His latest program is Crazy Delicious currently airing on Channel 4, who declined to comment when asked if the Melbourne controversy had hit ratings.
Hospitality industry sources said the restaurant in Melbourne missed the market and that Blumenthal needed to be more hands on.
The company also underestimated that staff would no longer work unpaid overtime for the chance to work under the Blumenthal brand.
A Fair Work Ombudsman investigation over underpayments because the company had paid them “annualised salaries” that did not take into account overtime, weekend and holiday penalty rates.
They have applied to the liquidator of Tipsy Cake to get the workers’ money back.
“It’s great to have your name on the door but people have this idea that you will be there to shake their hands,” a second industry source said.
“Gone are the days when you have 25 chefs and seven of them are on work experience.”
The set menu rule also turned off diners.
“They made a weird decision to go for a la carte to degustation only. It means you can’t get groups of mates together because they don’t always have the same budget.”
However, other sources were more forgiving, saying the “tyranny of distance” caused the collapse.
“I feel sorry for the guy because he was busy creating so many things,” a third source said.
A fourth source, who worked on the restaurant, said it was a “magical journey” that just went wrong.
Blumenthal, 53, has had problems in the UK as well, with a company linked to his restaurants reporting losses of $3.2 million in the year to May 2018, according to City AM reports from last year.
He also lost Ashley Palmer-Watts, the chef who helped him create the successful Dinner By Heston Blumenthal in London and was a consultant on the Melbourne branch.
The head chef announced on New Year’s Eve he was quitting to spend time with his family before setting up his new venture.
The 42-year-old registered a company called The APW Collective on January 28, which uses his initials however, details of his plans have not been made public.
Palmer-Watts was not at home when News Corp Australia visited him.
A cleaner said that he was “in the garden”, which was a separate property away from his home.
He did not call back.
Blumenthal did not have shares in the company that owned the Melbourne branch, Tipsy Cake Pty Ltd, which has gone into liquidation.
A Dubai franchise of Dinner, which was announced in 2018, has not yet opened despite official statements saying it was expected in 2019.
He still has Dinner By Heston in London’s exclusive Knightsbridge and The Perfectionist’s Cafe at Heathrow Airport.
Blumenthal also still has links to The Fat Duck, and a pub across the road from it called The Hind’s Head, in Bray, a small village an hour’s drive to the west of London.
He also bought The Crown at Bray, another pub in the village.
The Hind’s Head, which has a news clipping of the visit of King George attended a funeral in the village in 1938, had some of The Fat Duck’s most famous dishes on the menu to celebrate its 25th anniversary.
Staff at The Hind’s Head, which News Corp Australia visited, said they enjoyed working at the “quintessentially British” pub and proudly name-checked Blumenthal.
He has swum a mile from Tipsy Cake.
The chef rejected a request for an interview earlier this week and did not respond to written responses before deadline, instead seeking more time.
When News Corp Australia rang the doorbell at The Fat Duck, our reporter was asked to leave.
“We don’t have anything to say, if you could please leave. Thank you very much, goodbye,” a woman said.
The windows at The Fat Duck have thick curtains to prevent anyone seeing in.
Tipsy Cake’s liquidators Brian Silvia and David Coyne are working hard to find out what has actually gone on in Melbourne, but don’t be surprised if it ends up in court.
Originally published as Heston Blumenthal’s Dinner restaurant in Melbourne: What what led to its collapse
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