Fratelli Fresh, El Camino Cantina, Munich Brauhaus restaurants could close

The hospitality giant behind beloved restaurant chains El Camino Cantina and Fratelli Fresh has launched an investigation into its loss-making eateries as Australia’s cost-of-living crisis continues.

Pacific Hunter Group has posted sequential losses of $75.72 million, $87.48 million and $80 million post-pandemic, despite improved sales at the end of 2022.

Now the company is reportedly reviewing its casual dining ventures — owned by its Pacific Concepts division — as it tries to slim down its operations.

Pacific Concepts also operates Buck’s party favorite Munich Brauhaus, as well as The Bavarian, Bar Patron and The Argyle.

It remains unclear how many restaurants, if any, the company plans to close AFR reports.

In Australia, El Camino Cantina has 12 locations, while Fratelli Fresh has five.

There are 25 The Bavarian stores and two Brauhaus stores in Munich, while Bar Patron and The Argyle each have one location – their flagship restaurants in Sydney.

Many companies have resorted to cost-cutting measures as they grapple with the financial impact of the Covid pandemic. Last week, EY announced a staff freeze, while News Corp introduced caps on staff costs in February.

Late last year, the ailing hospitality group pinned its hopes on thousands of Australian workers returning to their offices.

But a global cost-of-living crisis driving up the cost of products has left companies more vulnerable to insolvency than most.

Rising inflation in Australia is also putting pressure on households that now have less money to spend on discretionary purchases such as visits to restaurants and bars.

Pacific Hunter Group and Pacific Concepts are controlled by Quadrant Private Equity whose investors include leading Australian and global pension funds.

In December, Pacific Hunter’s auditor, KPMG, noted that there is “material uncertainty that may cast significant doubt on the Company’s ability to continue.”

Pacific Hunter Group also runs gourmet restaurants Rockpool Bar & Grill, Spice Temple and Sake. It is unknown if they are endangered.

The food and beverage sector is the most vulnerable to corporate failure before the construction sector.

CreditorWatch industry data from the Business Risk Index revealed that 0.97 of hospitality businesses went bankrupt in the 12 months to March 2023.

Anneke Thompson, chief economist at CreditorWatch, said the end of government support has exposed many hospitality businesses.

“The sheer amount of government stimulus that fell on the economy as a whole allowed many businesses that were not viable to stumble through,” she said.

“These companies were nicknamed ‘zombie companies’ during Covid-19, and much higher supply costs, interest rates, labor costs and diminishing demand and government stimulus are now exposing these companies.”

Daily Mail Australia has contacted Quadrant Private Equity for comment.