Chocolate chain collapses after slow sales, rising costs

LUXURY chocolate chain Max Brenner is dealing with an unsure future as it’s plunged into voluntary administration.

A troublesome retail local weather leading to sluggish gross sales and rising costs are understood to be behind the dramatic choice — which was taken on Sunday afternoon.

The firm’s administrators appointed directors McGrathNicol to undertake the pressing assessment and it’s unclear how it will have an effect on the chain’s 37 Aussie shops. However, the chain stated will probably be business as traditional till additional discover.

McGrathNicol is known to be contemplating promoting Max Brenner or recapitalising the business, which has about 600 employees.

A press release from the corporate thanked employees and clients for the help of the business through the years.

“Max Brenner Australia remains open for business as usual at this time,” it learn.

“Chocoholics are respectfully invited to show their support by enjoying a hot chocolate or dessert as the Administrators assess the best solution to ensure Max Brenner Australia’s unique chocolate experience continues to delight millions of Australians in the future.”

Business developments professional Dr Lauren Rosewarne from The University of Melbourne, stated there could also be many causes for the confectionary model’s Australian decline.

She advised there might even be a political issue at play — because the chain started life in Israel which has copped criticism over its ongoing and sometimes violent feud with Palestine.

However, Dr Rosewarne stated she believes one of many fundamental causes for the chain’s decline is a change in Aussie meals habits — which suggests the novelty of dipping a strawberry in liquid chocolate has pale for many people.

“When Max Brenner opened in Australia in the late 1990s the food scene was very different,” she stated. “Now, artisanal chocolate and related outlets and cafes are all over the place: the novelty of Max Brenner has largely pale.

“The rise of social media and our embrace of lining up for pop-up, restricted version meals gadgets that we will then Instagram has changed the notion of dipping into a private chocolate fountain which feels fairly dated now.”

In Australia, the chain — which is understood for its fondue, crepes, milkshakes, waffles, and scorching chocolate — is owned and run by husband and spouse group Tom and Lilly Haikin.

They opened their first cafe in Sydney’s Paddington in 1999 and the chain is now headquartered in Alexandria, within the metropolis’s inner-west.

The pair, who made BRW’s Young Rich list in 2013 with a fortune of $40 million, branched out throughout the nation quickly after.

Now, there are 15 shops in NSW, 12 in Queensland, 5 in Melbourne, two within the ACT and Western Australia, and one every in South Australia and the Northern Territory.

However, Associate Professor Gary Mortimer from the Queensland University of Technology advised Max Brenner’s Aussie nightmare may be in comparison with struggles confronted by different meals teams corresponding to Craveable Brands — which owns Chicken Treat, Oporto and Red Rooster — and Retail Food Group Limited, which owns Gloria Jean’s and Michel’s Patisserie.

He stated Max Brenner needed to open seven new shops in Australia this yr — which he described as a “growth for growth’s sake strategy”.

“When you keep opening new stores in a market which is challenging it creates capital stress, because it requires resources and capital investment and that’s risky when the market is subdued,” he stated.

He additionally stated the “decadent chocolate” market is declining in Australia as well being acutely aware shoppers transfer to more healthy options.

“It’s a crowded market and consumers have changed their behaviour,” he stated. “They’re looking for lighter options and healthier options. Even McDonalds has salads.”

Max Brenner was based in 1996 in Ra’anana, Israel, by Max Fichtman and Oded Brenner who mixed their names. The business started as a small store promoting handmade goodies.

It is that this humble Middle Eastern origin which can have finally performed towards its success abroad in accordance with Dr Rosewarne.

“While it’s hard to determine whether it was a significant factor in Australia, Max Brenner — with its origins in Israel — has been, at various times, the focus of protests,” she stated. “This was perhaps also a factor in its demise.”

Student activists even protested towards the opening of an on-campus retailer on the University of NSW in 2013.

The anger stemmed from the actions of Strauss Group, which is among the many largest meals merchandise producers in Israel and Max Brenner’s earlier mother or father firm which publicly supported the Israeli army.

Strauss Group bought the chocolate firm for round $7 million final yr.

However, in line with the founders of Max Brenner, the corporate has all the time simply been about chocolate.

“Chocolate is not just about taste,” they stated. “It’s a symbol of different aspects in our lives — of romance, of sensuality, of decadence. These aspects actually create the new chocolate culture of Max Brenner.”

The chain’s success has seen it unfold so far as the US, Japan, Singapore, Russia and China.

It appeared the unfold was displaying no indicators of slowing down in January, when the corporate advised Inside Retail Australia it aimed to open as many as seven new native shops this yr.

However, it was clear all was not properly with the Australian aspect of the business when Sunstate Ceilings — a Queensland business — filed a wind-up discover towards Max Brenner on June 29.

The Australian Financial Review reported that Glenn Wein, the previous head of the Packer household’s Consolidated Press Holdings, was trying to put collectively a “rescue” package deal to save lots of the business, which owed about $50 million on the time.

McGrathNicol issued a press release saying it’s working intently with Max Brenner’s administration group to some up with an answer to the chain’s monetary issues.

“All Max Brenner stores will operate on a ‘business as usual’ basis with minimum disruption whilst the Administrators complete their urgent review of the operations,” it reads.

“We are assessing the prospects of completing a going concern sale of the business or a recapitalisation through the Voluntary Administration process.”

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