Sydney-based hospitality company, the Keystone Group, which runs some of the best known restaurants and bars in Australia, including Sydney’s Bungalow 8 and Cargo Bar, Kingsleys Steak & Crabhouse and Jamie’s Italian in several state capitals, has been placed in receivership by a syndicate of lenders.
Receivers Ferrier Hodgson says the move is due to an inability to reach agreement with the Board on key aspects of the Keystone Group’s financial structure.
Receiver Morgan Kelly said the venues will continue to trade on a business-as-usual basis while they assess each venue in preparation for sale. The group has nearly 20 restaurants and bars worth an estimated $100 million.
“Given the current buoyant hospitality market we anticipate a lot of interest in the sale of the venues,” he said.
“The venues in the Keystone Group comprise some of the most iconic and well-known brands in their respective markets.”
Last night Keystone executive Richard Facioni and MD John Duncan issued a statement saying the business was “operationally strong”, with more than 1,000 employees nationally, but blamed debt used to expand the business, as well as Sydney’s lockout laws, for the failure of the group.
“Two years ago The Keystone Hospitality Group undertook a major expansion program, including acquisitions, to become a significantly larger, national group,” they said.
However, the debt raised to undertake its expansion, combined with changes to the local market, including lock out laws, have placed significant financial strain on the business.”
In March, Keystone put the the business it all started with 16 years ago, Cargo Bar, at Sydney’s King Street Wharf, on the market saying it was shifting towards more food-focused ventures. But a buyer had yet to be found.
Keystone was launched just before the 2000 Olympics when Fraser Short and John Duncan opened Cargo Bar. Short departed Keystone in 2011 (he now runs a string of pubs, including The Morrison), bought out by Duncan, who remains managing director.
The business owns the Kings Cross pub Sugarmill, and the wine bar Gazebo, as well as Manly Wine, and The Winery in Surry Hills.
In 2014, Duncan launched a takeover of the publicly owned Pacific Restaurant Group, bringing Kingsleys restaurants in Sydney and Brisbane, the Chophouse in Sydney and Perth, and Jamie’s Italian into the fold. The British chef’s popular venue is now in Sydney, Brisbane, Perth, Canberra and Adelaide along with a Jamie’s Italian Trattoria in Parramatta.
Some industry insiders believe Keystone paid over the odds to acquire PRG, which made it difficult to service the debt.
Keystone currently has 17 venues under its control and was planning to be part of the Barangaroo development. Earlier this year the company sold the Newtown Hotel to the Colonial Leisure Group following an unsolicited offer. Late last year it shed around a dozen management jobs.
It’s not known to what extent Sydney’s lockout laws damaged the financial performance of the business. Two years ago Duncan admitted to Business Insider that they’d had an impact on Keystone, leading to a change of focus from bars in Sydney to a national restaurant business.