Grill'd over the coals for low wages and food safety

"SOLDIERS! You can go as extreme as you like should you wish to wear a full soldier camouflage costume and kit," the Grill’d Christmas party memo to staff said.

There would be no room for wowsers. Staff were told to wear a black T-shirt, camouflage pants or caps and black boots. They were told dog tags, guns and belts could be purchased "at a very low price on eBay".

Simon Crowe, the founder of Grill’d, would stand out from the rest of the crowd, dressed as a British soldier in a red and gold uniform and a big fur hat. It was late November and by 8pm, the chain’s workers were partying hard as Ariana Grande’s Bang Bang pulsated across the dance floor.

But this wasn’t a typical Grill’d party. News was spreading that The Age and The Sydney Morning Herald were about to expose questionable practices by the company. This included the treatment of some employees and franchises and, in some stores, poor health and safety compliance as penny-pinching restaurant managers pursued cost targets to secure bonuses.

Crowe didn't seem fazed. He posed for photos with a group of female staff dressed up as nurses, chatted to a few employees, then quietly slipped away.

The 47-year-old has had his fair share of troubles at the burger chain. In 2015, Grill'd was embroiled in a wage scandal which hit revenue and resulted in the company entering a confidential settlement followed by an enterprise agreement, which was supposed to be better than the previous pay deal.

A year later, 5000 current and former workers signed a petition exposing the company’s training program, suggesting it was a form of wage theft. That resulted in promises to have staff complete traineeships within 18 months.

The latest Herald and The Age investigation reveals that worker discontent is again brewing.

Workers are gearing up to renegotiate the current enterprise agreement, which has been described as "highly exploitative" by a leading workplace lawyer. That agreement was signed in 2015 and removes penalty rates for weekends, public holidays and work performed after 9pm on weekdays. It restricts overtime payments and provides little room for annual pay rises.

As a result, net wages have gone backwards. Employees are also frustrated by government-subsidised Certificate III traineeships in hospitality that many feel they have to do to get a job.

The economic benefits to the chain of having workers do traineeships are clear. A school leaver on a traineeship working Saturdays is paid $14.50 an hour, while the maximum an adult trainee at Grill’d can expect is $18.50. A non-trainee adult at Grill’d gets $21.75 an hour, seven days a week.

The Fast Food Award, which is supposed to provide the basic safety net for the sector, requires that adults are paid more than $21.41 to $22.70 during the day, and $26.76 to $28.38 an hour if they work Saturdays. For an adult trainee, it is a difference of at least $7.50 an hour. Extrapolated across a workforce of thousands of people over the years, it amounts to millions of dollars.

In piecing together a picture of life at the chain’s 137 restaurants, The Herald and The Age spoke to dozens of current and former workers and executives, some of whom were prepared to be identified while others feared damaging their future job prospects.

A trove of public and internal company documents were also analysed, including a year’s worth of payslips and rosters and a survey of 370 workers representing almost 10 per cent of the workforce.

The business is thriving on many measures. Most outlets (105) are owned by Grill’d, which turns over about $370 million annually and last year made a profit approaching $45 million before paying interest or tax. Those figures make Crowe worthy of inclusion on the nation’s rich lists.

Keeping costs down
Patrick Stevenson, a 23-year-old law student at Monash University, agreed to speak out against the company because he believes Grill'd doesn’t play fair. After almost two years with the company, he still hasn’t finished his traineeship.

"[The company's strategy is] all about profit, keeping costs down, like making people do traineeships [which under the Enterprise Agreement allows Grill'd] to pay them less, and other ways to cut corners," he said.

Grill'd worker Patrick Stevenson says he had to agree to a traineeship to get a job.Credit: Simon Schluter

He said that when he was offered the job at Grill’d he was encouraged to do the traineeship. "I don’t think I would have got it if I didn’t do the traineeship," he said.

Stevenson is one of hundreds, possibly thousands, of workers who would prefer to be paid ordinary wages than do a traineeship. "I have had to ask my parents for help paying the bills because the wages are too low," he said.

He hopes by speaking out he will get better conditions for thousands of workers.

One worker, who did not want to be identified, said the working conditions, pay and lack of training "felt like exploitation to me’’, while another said working at Grill’d had taught them resilience.

"Myself and many other co-workers that have left share the belief that if you can survive Grill’d, you can survive anything."

On such a journey, there will also be isolated outlier incidents when things don’t go to plan.

Grill'd statement

A survey of Grill’d workers, which included a spreadsheet with names, restaurants and shifts, was conducted in August 2018 by Emily Jones and Nicholas Simoes da Silva, who now work at the ASIC, and several Australian National University law professors.

It found that 92.4 per cent of Grill’d workers felt the traineeship was a waste of time and had little educational value. Many described it as a "farce" and a "scam".

Conducted as part of the Canberra Students for Fair Work, a student-led organisation associated with the law reform and social justice program at the ANU College of Law, the survey found 95 per cent of respondents weren’t given time by their managers to spend 20 per cent of their work hours training for their traineeship.

Grill’d management declined repeated requests for an interview. A series of questions was submitted, which the company declined to answer in full, citing confidentiality.

In a statement, it said it was central to its values that "we do our best to make sure that our people, including employees and franchise partners, feel valued and are treated equitably and properly".

It said its "traineeship program has provided qualifications and a pathway for thousands of people" and it was not a condition of employment that team members become trainees, although "we encourage our employees to complete the traineeship".

"Today, a trainee takes on average 13 months to complete the traineeship and in the last 12 months, over 750 employees have completed their qualifications," the statement said.

It said 31 per cent of restaurant workers were currently employed as trainees and that the government subsidies were offset by the "significant investment" made into the curriculum development. It said the net cost to Grill’d of running the traineeship program as it relates to government subsidies has averaged in excess of $450,000 each year over the past three years.

Grill’d conceded in the statement that it didn't always get things right. "On such a journey, there will also be isolated outlier incidents when things don’t go to plan, but we have always worked to make it right by our people, our suppliers, our franchise partners and our customers," it said.

Health concerns

One of the worst areas for things to go wrong for a food business is food safety.

Confidential internal audit reports of the company-owned restaurants dating back to 2017 show Grill’d has been warned about serious food safety concerns at one-in-10 of its 105 company-owned restaurants. They reveal numerous breaches of mandatory food and safety standards, with NSW and Victoria faring worst.

The audits, known as "gap analysis", reported serious failings to keep track of cooking temperatures for meats and chicken. Several restaurants had a "heavy build-up of food and mould" on the dress bench, which increases "the risk of old mould falling into sauces".

Other problems ranged from out-of-date food, raw meat and chicken not labelled or dated and left uncovered in the meat fridge, and a failure to record temperatures for certain products. In some instances, food and safety records were pre-filled, falsified or not filled in at all, as required by the Food Standards Code.

One internal audit revealed that a used Band-Aid had been found in a cutlery holder and there was no evidence of team members washing hands during food preparation and service, heightening the risk of microbiological contamination.

A December 2017 report gave a Malvern, Melbourne restaurant 14 "critical" ratings for non-conformance. This included raw chicken not being labelled or date coded, inadequate pest management and incomplete food safety records. Team members told the auditors a lack of resources and leadership not following up were to blame. Stonnington Council is believed to have been contacted about continued poor hygiene at the outlet. The company confirmed that the council was not currently investigating the store.

An audit of another restaurant warned of E. coli cross-contamination from gloves used to handle raw meat being reused and urged management to "please provide training to all team members on correct hand washing and glove use procedure’’.

Insiders blame it on a lack of training of staff, staff turnover of up to 60 per cent in some restaurants, a lack of resources and a lack of time allocated in the roster to clean restaurants and to ensure records are filled and equipment checked.

In a statement, Grill'd said it treated health and safety as an upmost priority. "Grill'd has made significant investments in systems, processes and people to ensure our food safety and team safety is best practice in our industry.

"This includes compulsory food handling and safety training and a monthly third party audit."

Fame and fortune

Grill’d has made its founder Crowe, 47, one of the Cleo magazine’s top 50 eligible bachelors for 2005, a rich man, with an estimated wealth of more than $450 million since the burger enterprise opened in 2004.

The founding partners were Geoff Bainbridge, who worked with Crowe at beer giant Foster’s, and Simon McNamara, a friend from Crowe's Brighton Grammar school days.

The way Crowe tells it, he was with mates at a Melbourne pub complaining about the quality of burgers when they dared him to open his own outlet. He took up the challenge and convinced McNamara and Bainbridge to take a combined 40 per cent stake.

Those who know him say he blossomed when he launched Grill’d, which opened its first store in Hawthorn in Melbourne’s east. He went from a mid-ranking marketing executive to an entrepreneurial rock star.

He used his marketing background to develop the name, the concept and design. But his biggest strength was understanding real estate and opening Grill’d in the right locations.

Over 15 years, Crowe built one of Australia's most popular and profitable burger chains, generating an estimated annual profit before interest and tax of $45 million, and selling more than 20 million burgers a year.

In 2012, McNamara sold out after tensions emerged over various issues, including McNamara’s involvement in fast-food chain Spud Bar.

Then in 2017, Bainbridge parted ways after a bitter legal dispute that ended in a confidential settlement. The court case revealed a deep resentment between the pair, with Bainbridge admitting he had called him a "c---", and Crowe saying: "He is somebody I cannot trust and who I detest."

Crowe declined repeated requests for an interview.

Managing the managers
The success of the business is built in part on an army of store managers. Grill'd's senior management comprises more than a dozen people, each responsible for a different aspect of the operation. Store managers are under pressure and incentivised strongly by the company to hit such targets as a ratio of labour costs to sales or wastage.

Company documents reveal that at least one Grill’d company-owned restaurant paid an average wage per hour of $14.16 over the five months to October 31, 2019. The figure included team leaders and trainees, putting the restaurant on an extremely low labour cost to sales ratio of 17.8 per cent.

To put it into context, under the Grill’d enterprise agreement a school leaver on a traineeship is paid $14.50 an hour. Workers aged 16 and under are paid $11 an hour. According to company documents, only three restaurants out of 136 paid an average wage of more than $20, with the highest at $20.86 an hour over the five months.

The average wage across all stores over the five months was $18.24 an hour, including weekends and public holidays.

Former restaurant manager Cabe Power, who quit in April, said there was constant pressure on managers to keep wages down.

"When the restaurant transferred ownership from being a franchised store to  corporate, the number of people on each shift was cut back, sometimes from six or eight people to four people doing the same job, which resulted in a lot of stress," he said.

He said working at Grill’d was like working for a cult. "They would say everything is possible and it’s your fault if you can’t do it," he said.

Others also spoke up about their experience at Grill'd. A worker in Perth’s Subiaco restaurant said it took her four years to complete the traineeship. She said she was promoted to team leader before completing her traineeship but shortly after completing it, she was demoted and her work hours were reduced.

"I had rent to pay so I couldn’t do it any more and quit," she said.

Workers complain they are rostered on shifts just shy of five hours, which means they don’t qualify for a 30-minute meal break and complimentary meal worth up to $15. The company avoids these extra costs by rostering some workers on split shifts, staff claim.

There have also been issues of underpayment by Grill'd, as highlighted by documents obtained as part of the investigation.

In 2012, a senior executive found that at least one restaurant between 2007 and 2012 didn’t have an employment agreement in place, meaning management should have reverted to the award, requiring five years of back-pay to the underpaid staff.

That one workplace is estimated to have underpaid staff by hundred of thousands of dollars. The workplace regulator, the Fair Work Ombudsman, was never informed.

Antonio Lumley, a former worker at Grill'd in Leederville, Perth, said he was forced to keep track of his pay with an excel spreadsheet after regularly being underpaid. "I had to have regular conversations with my manager about my wages being one or two hours out," he said.

There are also cases of workers being asked to go home after two or 2½ hours – less than the minimum three-hour shift that Grill’d is meant to pay. To avoid detection, some restaurants managers add those hours to the next shift.

Grill’d is the latest food network to have its wage structure criticised. It comes as the government is drafting a bill to criminalise wage underpayment and has flagged plans to simplify the country’s award system, particularly workplace arrange­ments in the hospitality and retail sectors.

Grill'd worker Antonio Lumley says he was frequently underpaid.Credit: Tony McDonough

Julie Peel, whose daughter worked at the Macquarie Centre restaurant in Sydney's North Ryde, said she and her colleagues were pressured to work outside the enterprise agreement.

"I’m furious with their behaviour," Peel said. "But I’m probably more angry that the government does not monitor these companies, does not reprimand these companies and does not offer full free legal advice to very young employees."

In a statement, the company it said any suggestion that the enterprise agreement was anything but “lawful, valid or compliant” is strongly denied.

The bible for managers is the Grill’d Focus Booklet. It outlines key performance measures, including wages, wastage as a percentage of sales, profit, mystery shopping and main-item volume, which is the number of burgers sold each day.

It shows that Grill’d pays its restaurant managers bonuses of up to $12,000 if goals, including wage targets, are met. That is a significant incentive when Grill’d confirms that the average base salary for restaurant managers is $68,500 a year and for assistant managers $54,000.

Grill’d said in a statement that two-thirds of respondents to a third-party-conducted anonymous survey of more than 2700 Grill’d staff in November 2019 recommended Grill’d as "a great place to work" and 72 per cent agreed they had "access to the learning and development I need to do my job well".

For Patrick Stevenson and others, the only way to make up for a lack of penalty rates is to work more hours.

"They put on a Christmas party every year and think that’s good enough. If they cared about young people, they’d be paying us a living wage," he said.