Max Brenner closes 20 out of 37 stores after announcing its financial collapse

When luxury chocolatier Max Brenner announced its financial collapse just days ago, the chain said it would still be “business as usual”.

But, today waffle and hot chocolate enthusiasts may have to go elsewhere to satisfy their sweet tooth because 20 of the company’s 37 Aussie stores are closing — despite the earlier claims.

Staff at the 20 locations will be made redundant as administrators try to sell or recapitalise the business and keep its remaining stores trading.

“The decision to close stores is always regrettable but in this case we were left with no choice following a store-by-store review of Max Brenner operations,” administrator Barry Kogan said in a statement.

Nine stores will remain open in NSW, four in Victoria, three in Queensland and one in the ACT.

The company is pulling out of Western Australia, South Australia and the Northern Territory entirely.

Max Brenner Australia cited “escalating costs and tighter retail trade” as the reasons for entering voluntary administration earlier in the week.

And as its Israeli parent company now says it is looking for a new franchisee to keep the Max Brenner brand alive in Australia, the chocolate chain’s former staff have spoken out about “toxic” working conditions and missed superannuation payments.

“All they cared about was how to make their pockets and egos bigger,” one former staff member wrote on Facebook, claiming the company had withheld her superannuation payments.

A major overhaul of the Max Brenner head office in Alexandria, Sydney was blamed for the company not paying staff superannuation for the last six months of 2016.

In a letter sent to staff in February 2017 and seen by Fairfax, the company said the multimillion-dollar renovations were “a major landmark” that “prepares us for the growth that lies ahead”.

“However, as a result of these investments, we are currently refinancing several areas of the business,” it read. “This process is unfortunately taking longer than originally planned and is having a temporary effect on cash flow.”

Max Brenner was founded in 1996 in Ra’anana, Israel by Max Fichtman and Oded Brenner who combined their names for the brand moniker.

In its early days, it was a small shop selling handmade chocolates.

In Australia, the chain — known for its fondue, crepes, milkshakes, waffles and hot chocolate — is owned and run by husband and wife team Tom and Lilly Haikin, who opened the first cafe in Sydney’s Paddington in 1999.

The pair, who made BRW’s Young Rich list in 2013 with a fortune of $40 million, branched out across the country soon after.

The chain’s success has seen it spread as far as the US, Japan, Singapore, Russia and China.

It appeared the spread was showing no signs of slowing down in January, when the company told Inside Retail Australia it aimed to open as many as seven new local stores this year.

However, it was clear all was not well with the Australian side of the business when Sunstate Ceilings — a Queensland business — filed a wind-up notice against Max Brenner on June 29.

The Australian Financial Review reported that Glenn Wein, the former head of the Packer family’s Consolidated Press Holdings, was looking to put together a “rescue” package to save the business, which owed about $50 million at the time.

McGrathNicol issued a statement saying it is working closely with Max Brenner’s management team to come up with a solution to the chain’s financial problems.

“All Max Brenner stores will operate on a ‘business as usual’ basis with minimum disruption whilst the administrators complete their urgent review of the operations,” it reads.

“We are assessing the prospects of completing a going concern sale of the business or a recapitalisation through the voluntary administration process.”

Business trends expert Dr Lauren Rosewarne from The University of Melbourne, said there may be many reasons for the confectionary brand’s Australian decline.

The success of small businesses in the Newcastle and Hunter regions is paramount and Small Businesses generally are vital to the NSW economy as well as playing an integral role within our community fabric.

This devastating closure raises the importance of regular financial interaction with your accountant to avoid a similar fate. Businesses within the Accommodation & Food Sector had the lowest survival rate – just 54.6% – of any industry in Australia last year. With over 93% of Hospitality outfits being small businesses, it is essential for any professional advice to be current, focussed on small business and with an understanding of the unique challenges of the industry.