Prominent Sydney restaurant and bar calls in administrators and blames lockout laws

A high-profile restaurant and bar located in Sydney’s Kings Cross could close its doors next week, with the owner revealing the city’s lockout laws have taken a toll on the long-standing business.

Hugos Lounge & Hugos Bar Pizza fell into voluntary administration on Wednesday, becoming the latest Sydney business to fall victim to the New South Wales government’s tougher rules on venues in the central business and entertainment districts.

Andrew Needham and Barry Taylor from HLB Mann Judd have been appointed to manage the administration process.

In an advertisement in today’s Australian Financial Review, Needham and Taylor called for urgent expressions of interest in the 15-year-old business located at 33 Bayswater Road in Kings Cross, although owner Dave Evans told Fairfaxhe expects Hugos will close early next week.

In the ad, the administrators said buyers are being sought for the “award-winning” nightclub and pizza restaurant. All assets of the business are on offer, as well as its licenses and “loyal staff required to operate [the] venue”, and the freehold on the venue.

There are a number of other venues in the Hugos Group, including a restaurant in Manly, but those venues are not part of the administration.

In administration are Management Kings Cross, previously trading as Hugos Management, and Properties Kings Cross, previously trading as Hugos Properties.

Evans, who is the brother of celebrity chef Pete Evans, said revenue at the King Cross venues had declined by 60% since 2012, when alcohol restrictions were first put in place in the area.

He told Fairfax the business had cut its trading hours and been forced to cut 100 jobs. The business currently employs 70 people but Evans said they have been told they will likely lose their jobs.

“We said it would destroy business, we said it would destroy staff,” Evans said in reference to the city’s lockout laws and the alcohol restrictions in Kings Cross.

Introduced in 2014, the city’s 1.30am lockout and 3pm “last drinks” rules were designed to curb alcohol-fuelled violence and assaults.

But Evans described the rules as “anti-competitive” and said Hugos has had “no trouble with alcohol”.

Speaking to SmartCompany this morning, administrator Andrew Needham said confirmed his appointment was directly related to the fall in patronage at the Kings Cross venues.

Needham said in 2011, prior to the alcohol restrictions and the lockout laws, the bar was turning over approximately $7 million annually. However, four years later, this had halved to around $3.5 million.

“They have the added problem of also being the property owner and so reduced turnover puts pressure on the ability to service the property,” Needham says.

“The shareholders got to the point where they really can’t afford to support it any longer.”

Needham says Hugos bar will trade this weekend but there is not enough stock on hand to open the pizza restaurant.

The administrators will re-assess on Monday or Tuesday, although Needham says he has “minimal resources” at his disposal to continue to trade the business.

Needham says finding a buyer willing to take on the venues as going concerns in the next week would be “the best outcome”, but says if there is not a lot of interest, the administrators will consider “alternative uses for the property”.

The collapse of Hugos in Kings Cross follows the liquidation of fellow longstanding Sydney restaurant and bar La Cita at the start of July.

La Cita Latin Restaurant & Bar had been trading in Darling Harbour for 13 years but was hit hard by the lockout laws. The directors told SmartCompany at the time the restrictions caused a “radical drop in business turnover”.