Ballarat’s most upscale restaurant, the 14-seat Underbar, began the year in new digs at Hotel Vera, but is moving back to its original, more modest home in central Ballarat this week after a breakdown in the business relationship between the proprietors and the hotel owners.

In June, Hotel Vera made three staff redundant, including Underbar’s co-owner and chef Derek Boath, who was the hotel’s culinary director overseeing breakfast and the degustation menu served on weekends.

Boath and his wife Lucy Taylor say they entered into lease negotiations to attempt to maintain the business at Hotel Vera after the redundancy. Those negotiations failed, prompting the move back to the original location on Doveton Street, which Boath and Taylor had converted into casual wine bar Pencilmark last year.

Taylor says they left Hotel Vera with nothing more than wine glasses, but had luckily kept plates from the original Underbar, which will be dug out of storage for their first service on Friday, August 11.

Long-term, they hope to revive Pencilmark (which holds its last service this weekend) and find the hatted Underbar a more permanent new home.

Hotel Vera’s owners, Martin Shew and David Cook-Doulton, say they needed an on-site restaurant that was open for more than two services each weekend, which was Underbar’s model. Their initial plans, as reported by this masthead last May, included a breakfast service and more casual weekday lunches.

The other two redundancies made were the hotel manager and 2IC, roles which have been assumed by Shew and Cook-Doulton, who have relocated to Ballarat from their other property, Hotel Ernest in Bendigo.

Cook-Doulton says Hotel Vera is in good shape: “It has great potential, and the numbers are certainly picking up every month, and we’ve had great feedback on it.”

Underbar opened in 2016 in a small Ballarat shopfront with a chef’s counter and a large communal dining table, which made dining there feel like an intimate (and very elevated) dinner party.

It will return to that style of service, with Taylor and Boath gradually toning down the bright murals and other casual touches that defined the space as Pencilmark, as they settle in for Underbar 3.0. The menu and team remain unchanged.

Hotel Vera is on the hunt for a new culinary partner.

Underbar opens from August 11, 7pm-11pm Fri-Sat, at 3 Doveton Street North, Ballarat, underbar.com.au