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Melbourne’s Restaurant Monopoly: The Rising Dominance of Corporate Groups

July 30, 2020 by Tom McCarthy

Melbourne's inner-city restaurant scene, with the emergence of dominant corporate groups, is starting to resemble a game of Monopoly.
Melbourne’s game of Restaurant Monopoly…most well-known inner-city restaurants are now part of a larger corporate group.

Raw Ingredients Delivered and Pickett-ed

Last Friday night my wife and I did an online cook with Melbourne star chef Scott Pickett, best known for Saint Crispin (Collingwood), Estelle (Northcote) and Matilda 159 (South Yarra).

For $130 we were delivered a pretty sizeable box of mostly raw ingredients, and told to tune into the Providoor instagram feed from 6.30pm, where Pickett delivered a lively hour-long performance, occasionally poked and prompted by fellow celebrity chef, Shane Delia.

I use the term ‘cook’ because calling a class might wrongly give off the impression it was something other than an hour of chaos – perhaps a good insight into the pressure-cooker world of a commercial kitchen.

Delia (left) and Pickett having a drink. Courtesy 9Now.

But Pickett clearly kept up his side of the bargain. Because at exactly 7:31pm, we’d dished up a French-inspired beef bourguignon that was just about Estelle-worthy. So commendations to the chef!

Longrain Mopped up by the Melbourne Food Mob

Speaking of the chef, Pickett mentioned during the class that he had recently taken on renowned Melbourne restaurant, Longrain, which its previous owners, Lisa and John Van Haandel, drew the curtains on in March due to COVID impacts.

I was a bit surprised by this. Voluntarily taking on another restaurant in present-day Melbourne – a city still in strict lock-down, struggling to contain its COVID-19 numbers – doesn’t sound all that appealing for a chef-turned-restaurateur.

But then it dawned on me that while Pickett is the public face, and may even hold a majority ownership, the Pickett company (aptly called Pickett and Co) is a sophisticated business; like many now operating in the Melbourne and Sydney city restaurant scenes, it is a well-oiled machine that probably looks more like a private equity firm than a chef who owns one or two restaurants.

(In fact, in some cases the transformation is complete: private equity firm Quadrant now owns Rockpool Dining Group, which includes Rockpool, Spice Temple, Saké and a host of other restaurants and bars.)

Over the past decade or so, as Melbournians developed a new favourite pastime of frequenting the ever-growing list of “institution” restaurants, so too has it become more commonplace for popular CBD and inner-city restaurants and pubs to be owned as part of a large corporate group. Take Chin Chin for example, which is the jewel in the crown of the Lucas Group “family”, which also has Baby Pizza, Kisumé, Hawker Hall and Kong.

On the facts, the argument seems to be strengthening that the level of sophistication and cost efficiencies required to operate a big-city restaurant profitably are not available to the great head-chef wanting to break out on his own, or the reigning MasterChef finalist wanting to capitalise on their culinary capital.

Restaurant Monopoly: Does it matter?

Does it matter that the Monopoly-like Melbourne restaurant game is one where corporate groups have usurped the traditional role of the oldschool makes-everyone-feel-like-royalty kind of restaurateur? A game where property management, shrewd marketing and deep financial backing are more crucial to success than knowing your patrons and the individual flair of the chef? Maybe not; at least for the time being, Melbourne’s dining scene continues to be celebrated.

But you would suspect that if the trend continues such that several super-groups emerge with something of an oligopoly on the market – ala the Merivale group in Sydney, which has over 70 restaurants, clubs and pubs – everything will start to feel a bit same-same-but-different. The restaurant experience will have become commoditised. And our dining dollars, rather than vindicating the ambition a young chef risking it all on her first restaurant, will instead be going towards the dividends on a private equity fund.

In any case, it’s probably academic for the foreseeable future. Acquisitions the likes of Longrain into Pickett’s stables will probably be repeated ten or twenty times over the next few years, as the larger corporate groups flex their muscles, showing-off a greater ability to withstand cash-flow strain and tap ancillary sales avenues (like Pickett was doing in collaborating with Providoor). It will be a war of attrition, in which the corporate groups will almost undoubtedly fare better, mopping up more and more stragglers the longer the COVID economy persists.

The Good News

If you don’t like the idea of the small guys getting squeezed out of the game, it’s not all bad news: independent restaurateurs are still succeeding – it’s just they’re having to set up outside the ultra-competitive inner-city scene. Take Navi for example, by Julian Hills, almost hidden in an unremarkable strip-shop in Yarraville, in Melbourne’s less plush inner-west.

We’re also seeing ventures harnessing the mass migrations out of Melbourne and Sydney to coveted coastal spots like Victoria’s Lorne (Ipsos by the Talimanidis family) and Sunshine Beach near Noosa (Sum Yung Guys by 2016 MasterChef runner-up Matt Sinclair).

And even in Melbourne and Sydney, who knows what lies beyond the horizon…in a post COVID-19 economy, with cheaper rents and a different industrial relations landscape, the pendulum might just start swinging the other way.

WIN: A night at Lorne’s Ipsos  

Sign up below for the latest MDS posts and go in the running to win a $250 voucher to the Good Food Guide-hatted Ipsos in Lorne, where you’ll be warmly welcomed by the Surf Coast’s rising restaurant star, Dominic Talimanidis.

(Sign up required before 31 August 2020 – winner will be announced shortly after)

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Filed Under: Coronavirus, Economics, Food and Drink, Melbourne Restaurants Tagged With: affect of covid on restaurants, estelle by scott pickett, hospitality private equity, ipsos dom talimanidis, ipsos lorne, melbourne restaurant monopoly, melbourne restaurants, private equity australia, providoor, restaurant corporate groups, restaurants private equity, scott pickett chef, shane delia chef

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Tom McCarthy, through Mr Double Speaker, is discovering his voice in a less intermediated way – the century old format of blogging.

Averse to labels (including writer, lawyer and retail business-owner) and scared of being pigeon-holed, might he find solace through blurring the lines of writer, editor and publisher? Or will this bastardised model prove too powerful?

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