Rockpool Dining Group slides to $80m loss as Covid closures bite

High profile restaurant group Rockpool has plunged to a heavy loss in the face of the coronavirus pandemic that’s put its future under a cloud.

Sydney’s Rockpool Bar & Grill.

The private equity-owned Rockpool Dining Group, best known as the one time home of famed chef Neil Perry, plunged to a heavy loss in the face of the coronavirus pandemic with its auditors noting there was a “material uncertainty” about its ability to continue as a going concern.

While the upmarket restaurant operator insists that it is getting back on an even keel after the savage impact of the shutdown and the shock of splitting with the chef who transformed Australian dining, its accounts show losses of close to $80m as the pandemic closed fine dining establishments and hit its money-spinning casual outlets.

The company, best known for premium steak house Rockpool Bar & Grill and the regional Chinese cooking of Spice Temple, controls 16 brands and more than 80 restaurants.

Perry, one of Australia’s most famous chefs, announced his retirement as culinary director in early July, and is now focused on his charity Hope Delivery that delivers food parcels to migrant chefs and kitchen hands in Sydney and Melbourne who lost their jobs during the pandemic.

He remains a consultant to Rockpool and a shareholder while also working on the Qantas food and beverage offering.

Rockpool auditors KPMG said the company’s report, particularly the impact of COVID-19, “indicate that a material uncertainty exists that may cast doubt on the company’s ability to continue as a going concern”.

The business was “significantly impacted” by the pandemic and strict measures implemented by federal and state governments to slow its spread, with international custom also hit, the accounts said.

Government-imposed shutdowns saw most of its venues closed during the first national lockdown, with only limited takeaway and delivery sales between then and early June.

Rockpool said it took “difficult but decisive” moves to slash costs, standing down most employees when restaurants were closed and making some redundancies.

But operations had been steadily reopening since June with as many venues as possible back trading. It cautioned that some venues were yet to reopen where levels of customer traffic were low, citing some CBD locations that had been affected by the trend to working from home.

Chef Neil Perry remains a consultant to Rockpool and a shareholder. Picture: Toby Zerna

Rockpool benefited from relief measures granted by shareholders, including private equity firm Quadrant, lenders and government bodies, including getting the JobKeeper program.

Sales fell to $262.8m in the last financial year from $325.8m in fiscal 2019 as COVID-19 restrictions bit and it fell to a loss of $79.91m, well below 2019’s loss of $40.39m.

The losses mean the company has wracked up accumulated losses of $224.6m since it was set up, although this may be due to the private equity-style of high-leverage investing

Rockpool managed to open 12 new venues, permanently closed one and converted two, taking its empire to 83 outlets. But it was also knocked about by Melbourne’s second lockdown.

Since the end of June, Rockpool has agreed to surrender four leases and is in negotiations with landlords on its most profitable locations.

The company said its business “remains affected by associated levels of uncertainty in relation to outlook and consumer confidence” and it was getting the second phase of JobKeeper after already receiving in $4.81m.

In a note in the accounts Rockpool called out the possibility of further shutdowns and the pace of recovery more broadly as being difficult to predict.

At the end of June it had cash and equivalents of $33.82m and net current liabilities of $16.03m, including a significant level of lease liabilities that are subject to talks with landlords.

Rockpool’s loan facilities were refinanced in November 2019 for a three-year term and it had $423.63m of drawn borrowings.

Rockpool said that as consumer confidence returned it had been able to steadily increase the number of venues reopened and had generally seen an improving pattern of trading, which gave it the confidence to issue accounts on a going-concern basis.