Food Chain Shuts 16 Locations, Blames Rising Costs

A chef serves food at a Japanese restaurant in Melbourne, Australia, on Oct. 22, 2021. William West/AFP via Getty Images

Offering patrons all they could eat was not enough to keep them coming back, forcing 16 restaurants across Australia into administration this week.

They are part of more than 50 eateries run by the popular all-you-can-eat Japanese restaurant business Okami.

The affected restaurants are company-owned sites in the Australian Capital Territory (ACT), New South Wales (NSW), Victoria, and South Australia. The other sites operate under a franchise model.

All have gone into voluntary administration, with the chain’s founder citing delayed costs from the COVID-19 pandemic and rising inflation as the causes.

Audit, tax, and advisory firm Grant Thornton has been appointed with Phillip Campbell Wilson and John McInerney named joint administrators.

Mr. Campbell-Wilson said Okami founder Jimmy Wang blamed increasing operational costs for the collapse. Mr. Wang came to Australia from China in 2002 to study engineering.

“Based on our initial discussions ... [Mr. Wang] believes 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,” Mr. Campbell-Wilson said.

Tax Office Likely to Be Among the Major Creditors

The Australian Taxation Office and related entities are likely major creditors, although this is “subject to further detailed investigation.”

Okami has more than 30 dishes on its menus, and diners can eat as much as they like for one payment, usually $39.80 (US$26.86), though some stores charge $41.80 (US$28.21).

Approximately 250 staff are affected.

Mr. Campbell-Wilson confirmed the restaurants will continue trading through the Christmas period.

“Aimed to reduce the impact of the administration on the employees leading into Christmas, we have committed to funding the pre-appointment wages, ensuring that all employee wages are up-to-date,” he explained.

He also said the priority was “preserving business value and to provide an opportunity to consider a formal restructuring plan.”

In a podcast interview earlier this year, Mr. Wang highlighted challenges such as high construction costs, delays in opening, and expensive staff due to the shortage of people with culinary skills.

“People [are] always asking for the higher price when they don’t reach our standard,” he said.

He also revealed he switched from studying engineering to commercial cookery due to “family financial problems.”

Initially, he worked 70 hours a week, including as a kitchen hand, before starting a restaurant. He said he hoped to open 100 restaurants across the country.

“Australia is a fair country,” he said. “They give all people the same opportunities. If you work hard, you [will] definitely get what you want.”

Opened a Training Institute

Okami opened its first store in Hampton, Victoria in 2013 before expanding to Caulfield in 2015 and later to NSW, Queensland, South Australia, and the ACT.

Mr. Wang also established the Oak Leaf Education Institute in Melbourne, to train both domestic and international students in kitchen and hospitality management and cookery, partly to help overcome the shortage of skilled staff faced by the sector.

According to Statista, at the end of financial year 2023, there were a total of just over 54,000 cafés and restaurants in operation in Australia.

Revenue in the sector had been rising consistently until the COVID-19 pandemic in 2020, but recovered by 2022.

Revenue of Australian restaurants and cafes, 2004 - 2022 (in billions of dollars). Source: Statista

Australians spend an average of A$126 on hotels, cafés, and restaurants each week, coming in behind basics like housing, food, and health expenses.