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Our Restaurant Industry FAQ’s

Which creditors are considered priority? Who gets paid first, second, etc.?

Secured creditors such as banks and other charge holders are almost always paid in advance of unsecured creditors. Trade creditors are generally ordinary unsecured creditors. Both the Corporations Act 2001 and the Bankruptcy Act 1966 specify that certain classes of unsecured creditors are to be paid in priority to other classes, and where there are insufficient funds these groups of creditors are to be paid pro rata.

Corporate priorities are governed by Section 556 of the Corporations Act, 2001 while bankruptcy priorities are covered under Section 109 of the Bankruptcy Act, 1966.

In general, the main priorities for companies are generally as follows:

  1. Expenses reasonably incurred on behalf of liquidator protecting and realising the assets.
  2. If the Court ordered the winding up, the taxed costs of the petitioning creditor.
  3. The liquidator’s expenses and remuneration.
  4. Employee wages and superannuation.
  5. Compensation claims.

Employee long service leave, annual leave and redundancy.

There are a few situations where the priorities may change, for example:

  • Creditors with floating (including fixed and floating) charges will only be repaid their debts after employees are paid in full.
  •  Directors and their spouses are “excluded employees” and their priorities are limited to $2,000 and $1,500 for wages and leave entitlements, with the balance ranking as an ordinary unsecured claim.
  •  Persons who contribute money to the company for the purpose of paying wages may also be entitled to claim priority for those monies

In bankruptcy, the order of payment of unsecured creditor claims will generally be as follows:

  1. Realisation and interest charges payable to the government.
  2. Expenses reasonably incurred on behalf of the trustee protecting the bankrupt’s assets or carrying on a business of the bankrupt.
  3. Other expenses paid by the Trustee in administering the estate.
  4. The taxed costs of the petitioning creditor.
  5. The Trustee’s remuneration.
  6. Employee wages to a maximum of $3,100.
  7. Workers compensation claims.
  8. Employee long service leave, annual leave and sick leave.

When can I expect a dividend, and how much can I expect?

The likelihood, quantum and timing of a dividend is specific to a particular matter.The likelihood and size of a dividend to you as a creditor may be influenced by:

  • The sum the realisation of the matter’s assets.
  • Your classification as a creditor, i.e. employees receive a priority over unsecured trade creditors.
  • The quantum of debt provable.

The timing of a dividend to you as a creditor may be influenced by:

  • Saleability of Assets and the terms of sale
  • Difficulty of legal proceedings
  • Timeliness of debtors paying
  • Other unanticipated issues that may arise

How do I complete a Proof of Debt (POD) form?

This form enables you to prove to the Administrator/Liquidator the entire quantum of your debt.

If you are a trade creditor, it is advisable that you attach copies of your outstanding invoices and a copy of your statement.

If you are an employee, it is recommended that you attach a separate schedule outlining the type of employee entitlements that you are owed (wages, superannuation, annual leave, long service leave) and the corresponding amount to each.

How do I complete a Proxy form?

When you receive notice of a meeting, you will always be sent a proxy form for completion.
This form can be used in the event that you cannot personally attend the meeting or if you are a representing a company.
A proxy form that accompanies your notice will be completed specific to that company and meeting date and time.

Do I need to speak with Riad Tayeh or Antony de Vries or can someone else help me with my enquiry?

You don’t need to speak with Riad Tayeh or Antony de Vries. Just call our office and tell the receptionist the company’s name (the matter) that you are calling about and the receptionist will put you through to the appropriate staff member that will be able to help with your enquiry.

Restaurant Industry FAQs

What are the key operating trends today for restaurants and catering?

  • The use of information technology to manage and analyse costs and operations.
  • The use of technology in the kitchen including packaging and heating apparatus (direct heat burners).
  • The need for investment into people development as a staff policy.
  • Outsourcing to utilise high level skills on a shared basis between small restaurants especially in finance or business management.
  • Close management on purchasing and supply chain costs.

Do you know where real profit is made?

A research study in 2004 identified many restaurateurs have underestimated the value of beverages towards total restaurant profit. In over 65% of cases it accounted for 25% of profit yet under 12% of turnover.

Do you understand your clients?

In 2005, International Restaurant research group, Millgates confirmed that less than 5% of restaurants had undertaken any research into consumer trends, yet it can be the difference between success and failure.

How does the food pyramid effect a menu?

As the US and Australia change the food pyramid, the consumer demands a change of food menu.

What are the latest marketing trends?

Concepts such as multiconcept chains under umbrella are providing new marketing and profit opportunities for small restaurant owners against the larger branded groups. Provides growth without crossing your original restaurants brand.

So what has not changed?

Quality and service are still key over price. Have you, as a business owner a clear vision of what the terms ‘quality and service’ mean to your clients. Do you really know why clients come to your restaurant rather than a close competitor?

What are the four success factors for a small restaurant owner today?

  • You must have a clear, conscious vision that matches market needs.
  • You must have a network of relevant peers that you can consult and brainstorm with.
  • You must have a relevant mentor.
  • You must be persistent.

Why do restaurants fail in the first five years?

  • They do not understand their markets or how to deal with them (menu, location, décor and experience).
  • They do not know where they are making or losing money.
  • Place trust and investment into the wrong people.
  • Spend time and resources poorly in building marketing programs and branding.
  • They do not take advantage of knowledge and resources available.
  • Poor start up preparation in finances and vision.

How do I get ready for sale?

Most business owners do not plan to sell. The reality is that to maximise the sale of a business requires planning and implementation in issues of branding, marketing, EBITDA maximisation, and consistent historic financial track record.

Issues to address also include ensuring the business is not dependant on one or two people for its branding (famous owner, chef etc), lease and business name is protected, and any technology or innovative processes are protected or registered.

Whilst sale price is based on average 3 to 4 time EBITDA, within negotiations issues of Brand value, Trademarks, patents or registered trade names and IPO with recipes can have additional value.