Sixteen restaurants managed by the all-you-can-eat Japanese restaurant business Okami have entered voluntary administration, as its founder contends with delayed COVID-era costs and rising inflation.
Documents listed by the Australian Securities and Investments Commission (ASIC) show businesses corresponding with Okami locations across Victoria, New South Wales, South Australia, and the ACT are now under administration.
The businesses include venues in:
Three other businesses, not named in correspondence with Okami restaurants, are wrapped up in the same administration process.
Philip Campbell-Wilson and John McInerney of Grant Thornton were appointed joint administrators on December 15.
In a statement provided to SmartCompany on Tuesday, Campbell-Wilson said the venues under voluntary administration fall directly under the management of Okami Distribution and are not part of the business’ broad franchise network.
Preliminary investigations have unearthed some potential causes for the business’ recent difficulties.
“Based on our initial discussions with the founder of the Okami business, they believe there has been a lag effect from the COVID-19 pandemic combined with inflationary pressure on costs which has led to a decline in sales and escalated operational costs,” Campbell-Wilson said.
The Australian Taxation Office (ATO) and related entities are likely to be major creditors to the venture.
However, the joint administrator stressed the investigation has only just commenced, and the details are “subject to further detailed investigation”.
The first meeting of creditors will be held virtually on December 19.
In good news for customers of the well-liked restaurant chain, the administrators have confirmed they will continue trading the business through the busy holiday period.
“This approach is aimed at preserving business value and to provide an opportunity to consider a formal restructuring plan,” Campbell-Wilson said.
It will also give breathing room to the 250 full-time, part-time, and casual employees working at the affected restaurants.
“We have committed to funding the pre-appointment wages, ensuring that all employee wages are up to date,” the joint administrator continued.
“This action is aimed to reduce the impact of the administration on the employees leading into Christmas.”
While the administration covers a significant portion of the Okami network, which spans more than 50 restaurants nationwide, it does not include the venues operating under its franchise model.
As the core business contends with surging costs, Okami positions its broad franchise network as a point of pride.
“Yes, an increasing number of our Okami franchisees have more than one shop,” the business says on its website.
“Many of the franchisees would like to open another one after witnessing the success of the first one.
“It is a testimony to the quality of our business model.”
Senior Business Journalist
Focused on the small business sector, David’s work covers the political, regulatory, and economic issues facing Australian entrepreneurs. Prior to joining SmartCompany, he was a reporter for Business Insider Australia. You can follow him on LinkedIn.
