Black Friday For Australian Hospitality

On Public Hospitality Group, the ARCA, and a very bad day.

Jon Adgemis of Public Hospitality Group

It was a sunny, windswept day in Melbourne. The breeze was sweet and fresh, sending ribbons of fallen Autumn leaves tangling through the air. It felt like a Friday like any other. I brewed up a pot of stovetop coffee, and sat in my backyard soaking in some sun and contemplating the day ahead.

I haven’t been thinking much about hospitality lately, beyond the simple act of enjoying it. The journey I’ve been on from someone broken by hospitality, into someone who can exist within its ecosystem without letting it hurt me, has been a slow and unfolding one. My current remove, where I’m able to still comment on the industry and partake as a consumer, is an awkward one. Allowing myself to let go of hospitality, and enjoy it from the other side of the table, hasn’t been easy. I’m still not quite there yet.

And yet a few stories have caught my eye recently. For the longest time, as a jaded hospitality professional, I’ve fought off a creeping feeling of cynicism that would tingle in my stomach upon reading about certain hospitality operators. I’ve just been in too many meetings with too many self prescribed captains of industry, who can sell a dream to anyone, but rarely have the resources or acumen to follow through. Call it a shady spidey-sense, or as the great North Melbourne coach Denis Pagan would say, the ability to distinguish between piss and rain.

In the case of Public Hospitality Group’s Jon Adgemis, the spidey sense was most definitely tingling, and the web being spun has turned into a very tangled one indeed. Keen hospitality observers will remember the name from as far back as 2018, when while still a hotshot dealmaker at KPMG, Adgemis was part of a group of investors behind Richmond’s Cafe Brass. If you don’t remember Cafe Brass, you could be forgiven; it closed after only four months, leaving behind $113,242.29 in unpaid fees and over $60,000 in unpaid superannuation to staff. Thankfully, the only ASIC-listed director was the 27 year old son of one of the investors. What a lucky escape!

From there, under the banner of his company Public Hospitality Group, Adgemis set about indulging that most beloved ex-finance bro passtime: buying and doing up old pubs for profit. Along the way, the group has shown a canny knack of aligning themselves with the right people, and acquiring the services of high profile operators. Perhaps Public’s most renowned venue is Maybe Sammy, the internationally lauded Sydney cocktail bar, which has spawned a small group of venues operated by Martin Hudak, Vince Lombardo and Stefano Catino. Public purchased their portfolio in 2023, in a statement of intent for the sort of venues the nascent group wanted to operate.

The time-tested trope of putting a celebrity chef on the marquee has been a key strategy behind Public’s rapid expansion. Clayton Wells, the multi-hatted chef behind Sydney’s Automata and A1 Canteen, was appointed group culinary director. At St. Kilda’s Saint George, the legendary Karen Martini was appointed to oversee the menu and be the face of the venue. Kew’s Clifton Hotel was repackaged as Puttanesca, with the notable PR heft of Guy Grossi and former Carlton captain Marc Murphy behind the venue. So far, so good; all expensive investments, but ones made in talents that will attract a crowd. Saint George in particular was received very warmly, and continues to be a popular destination in the slow revitalisation of Fitzroy Street.

However, it was the announcement that Public had taken over Sydney’s beloved Greek institution Alpha where I began to get the sense that Adgemis and co were getting out in front of their skis. The decision to appoint George Calombaris as a creative partner in the business, who himself is still in the process of a gradual return to the spotlight following a much-publicised fall from grace, raised eyebrows about the level of oversight going into Public’s decision making. 

So it came as little surprise to me in April when news broke of the monumentally gaping chasm of financial catastrophe that Public Hospitality had found itself in. Along the way, the group had reportedly amassed debts approaching $700 million dollars. When an attempt to reach a $500 million refinancing of the group with American private equity firm Bain Capital fell through after Adgemis failed to provide a $2.5 million surety, it looked as though Public Hospitality was headed for collapse. However, this past Friday, as I sipped my coffee in the sun, I read that Adgemis had managed to reach a smaller $400 million deal with a Deutsche Bank-led consortium, effectively saving the group. Unfortunately for the numerous staff of the embattled empire, this deal will require PHG to offload several assets to pay off debts, adding to the uncertainty around the future of PHG venues. Adgemis’ home and offices were visited by tax authorities, as reports of staff missing superannuation and chiefs using personal credit cards to pay for stock, among other tales of impropriety, emerged. To summarise it neatly, it’s a very tangled web indeed.

Where this leaves PHG’s relationship with high profile personalities Martini, Grossi and Calombaris is unknown, but one of their stable of high profile recruits has already flown the coop. Later on that windswept Friday, Broadsheet reported that Clayton Wells had left PHG after 12 months in his role. Wells retains his position as chef at the Art Gallery of NSW’s MOD Dining, and will no doubt become a much sought-after talent if and when he decides to re-enter the fine dining space. High profile Sydney chef Allessandro Pavoni, at one time aligned to a PHG project in Balmain, is now also no longer associated with the group. It’s a deeply unfortunate result for Martini, who has only recently endured the very public collapse of her Federation Square venue Hero, but especially for Calombaris. To be so closely associated with yet another major hospitality group on the verge of disaster so soon after coming on board might be a blow that the already beset-upon chef will struggle to return from.

Wells’ departure and the PHG bail out weren’t the only major hospitality stories that broke on Friday, as the newly-formed Australian Restaurant & Cafe Association (ARCA) announced their formation. Chaired by Neil Perry and managed by former Restaurant and Catering Association CEO Wes Lambert, the ARCA aims to be a prominent lobbyist for the industry, saying “enough is enough” and seeking to influence government decision making on the stuggling hospitality industry. Other members of the lobbyist group include Chris Lucas, Luke Mangan, Merivale’s Jessica Furolo, Stokehouse’s Hugh Van Haandel, Swillhouse’s Anton Forte and Fink Group CEO Jeremy Courmadias, among others. It’s a veritable hospo super group, like The Travelling WIlburys of smart casual sharing plate concepts.

While I’m happy to see another voice for the industry, particularly as the pre-existing Restaurant & Catering Association wrestles for relevance, there are enough divisive figures amongst this cohort for me to question whether or not this is the ideal group to represent our industry. Lucas, while an undeniably successful businessman and industry leader, has been the source of numerous scandals and underpayment allegations. So too have Merivale, who while they remain one of Australia’s largest employers of hospitality staff, have an ongoing underpayment dispute. Even CEO Wes Lambert isn’t immune to the trevails of large scale hospitality, having served as Executive Director of Pacific Restaurant Group, the original operators of the ill-fated Jamie’s Italian franchises in Australia, which eventually collapsed owing millions.

Should experiencing failure in the hospitality industry disqualify you from serving as an advocate for said industry? Certainly not. Should allegations of underpayment and improper workplace culture mean you’re not a suitable voice to represent the industry? I would say it’s a discussion worth having. Given the only barrier for entry to the ARCA appears to be the owning and operating of multiple venues, would not Jon Adgemis also be a prospective member of this association? It’s the dichotomy and inescapable truth of Australian hospitality; there is a fine line between success and failure, and the ice beneath your feet can be thinner than you realise.

As I walked through the supermarket check out later that day, I stopped to flick through the Herald Sun, as Kara Monssen’s front page story about the crisis in hospitality caught my eye. Caterina Borsato, whose eponymous city restaurant recently sustained severe and tragic flood damage, gave voice to the anguish and frustration that so many operators are feeling. The article also gave a detailed analysis of the COGs and overheads challenges that venues are facing, and why the very real concept of $50 counter meals in pubs could eventuate if things don’t improve.

It was a great article, but frankly, all a little too much for me to bear. Instead opening Instagram to distract myself as I waited in the check-out line, I saw a post about multiple allegations of sexual assault against a high profile Melbourne restaurateur. I wasn’t planning on visiting BWS, but I now most certainly needed a drink.

This was a Friday where it felt like every piece of news about the business I’ve loved and lived for was dark and foreboding, and by the time the cocktail hour came about, I was ready to bury my sorrows in the bottom of a wine glass. The bad days seem to outnumber the good lately. I’m looking forward to brighter days ahead.