Iconic Hog’s Breath chain rocked by string of closures
Most of us have tucked into a plate of Hog's Breath prime rib steak and curly fries at some point or another.
But 30 years after Hog's Breath Cafe was founded, the beloved restaurant chain has been rocked by a string of closures, bankruptcies and allegations of mismanagement.
And some embattled franchisees now say it's only a matter of time before the brand disappears altogether.
HOG'S IS BORN
The first Hog's Breath Cafe opened in Airlie Beach, Queensland in 1989.
A second branch opened the following year, and soon it became a bona fide sensation, with restaurants popping up across the country and overseas in New Zealand, Singapore and Thailand.
In its heyday, there were 83 Hog's restaurants in operation - but today, it's a very different story.
A dozen outlets have shut down this year alone, with the Maitland NSW branch closing just last week.
Some affected franchisees have declared bankruptcy, while others have allegedly lost their homes and other assets.
Hog's Breath CEO Ross Worth has previously blamed a weakened economy and a downturn across the restaurant industry.
But according to franchisee Desmond Francois, that doesn't stack up.
Mr Francois, whose Hog's outlet in Morley, Western Australia closed in March, was forced to declare bankruptcy with debts of more than $1 million.
He told news.com.au the problem was Hog's-specific, as other restaurant chains including Domino's and KFC had actually reported growing year-on-year-sales.
He claimed struggling franchisees had approached the owners to ask for temporary royalty discounts to boost their cashflow, but the request was denied as the company "cannot afford it".
However, Mr Francois said Hog's Breath Cafe Australia had "pre-tax profits of $2.2 million" for the year ended June 2018 despite recording 49 consecutive months of declining sales.
News.com.au has seen financial documents that appear to verify that claim.
"It isn't the industry at all, the problem is Hog's Breath," Mr Francois said.
Mr Francois said a "confusing" rebrand in 2016 - when the name of the chain switched from Hog's Breath Cafe to Hog's Australia's Steakhouse - came in the midst of declining sales and "exacerbated" the problem.
But Mr Worth disagreed and said it was "unquestionably the toughest environment we've seen in our 30-year history".
"To say that restaurant closures can't be blamed on a downturn in the economy is contrary to every report that I've read over the past 18 months," he said.
"In addition to a decrease in spending, we've also had to adapt to completely new customer eating habits with the arrival of food delivery services and meal kits.
"We are also experiencing increases in operational costs with rising wages, raw food costs, rent and electricity."
Mr Worth said the company worked closely with franchisees to manage costs, partnering with Energy Alliance to "reduce electricity costs in over 10 restaurants (and) saving them thousands of dollars".
"We work with individual landlords in negotiating rent reductions where we can, and just recently the landlord in Glenelg agreed to cover significant renovations to the restaurant before it reopened," he said.
"Whilst the quick service industry is seeing growth, the dine-in restaurant sector has experienced 10 consecutive quarters of decline."
Other franchisee allegations include a lack of assistance from the franchisor and a lack of transparency, especially regarding budgets and expenses.
Franchisees claim they have had access to their own branch's social media pages removed in recent years, and they have been forced to run confusing and "offensive" promotions, including a Valentine's Day Facebook post with the double entendre caption: "If you're after a spoon or a fork, we've got you covered".
They also slammed several decisions from head office, including the removal of the popular complimentary second side dish option from signature meals, the offer of $100 bar tabs to some returning customers and the creation of Hog's spin-offs such as Hogs Express, Funky Mexican Cantina, a Hog's food truck and Bar Nineteen89 - all of which have failed.
But Mr Worth told news.com.au the company wanted its franchisees to succeed, and it provided them with a business coach, "full financial and cost control advice", human resources, "comprehensive marketing plans" and ongoing training.
"Our franchisees and representative franchise bodies are involved in any major changes or decisions made as a brand, such as menu changes, offers and promotions," he said.
However, Mr Francois said struggling franchisees were left "in millions of dollars of debt" with "no support", and many had banded together to form a franchisee association.
He said he had spoken with "more than a dozen" franchisees with similar grievances who were "too afraid to speak out", and a number of complaints had been lodged with the Australian Small Business and Family Enterprise Ombudsman.
"It's a shocking state of affairs when you invest over a million dollars only to effectively become a voiceless business owner with no control over your own marketing material and no say in any part of the business," Mr Francois said.
"This is the fourth continent I've owned businesses in, and I've never seen anything like this in all my life.
"Ross Worth has openly stated in a meeting held with franchisees … that he anticipated and expected a further 20 stores to close this year.
"Hog's Breath Cafe Australia is in a serious financial situation … I expect Hog's Australia's Steakhouse to be gone within two years."
That's a claim Mr Worth denies - although he said future closures were possible.
"Whilst we may unfortunately see some additional closures in future, we reopened our Glenelg restaurant in Adelaide last week and are working to reopen our Maitland restaurant on the NSW coast which recently closed," Mr Worth said, adding there were "no plans in the future to close the operation of the Hog's brand".
Mr Francois also claimed franchisees were prevented from owning other businesses, but a number of people in the upper echelons of the company were able to work in head office while owning several Hog's restaurants and associated spin-offs.
News.com.au has also seen notice of breach of franchise agreement documents sent to two Hog's franchisees by Hog's Breath Cafe Australia after they struggled to pay their monthly royalty fees.
One ex-franchisee who spoke with news.com.au anonymously said they had avoided bankruptcy "through the skin of (their) teeth" and claimed the franchisor acted outside the franchising code of conduct.
The franchisee also claimed after Hog's Breath's operations manager left several years ago, the business model was changed - and cost burdens had increased, meaning franchisees weren't able to make money.
They claimed the cost of certain promotions was not able to be kept within an agreed percentage, meaning many stores were forced to "absorb the cost", which reduced their "bottom line".
"Financially, I'm still struggling and I have debt. We're talking about a lot of people whose lives will never be the same again and who won't be able to provide for their families in the future," the former franchisee said.
"It's just wrong … the toll has been horrendous."
Mr Worth said store closures were taken seriously and the company's "first priority" was always the "health and wellbeing of our people and the impact that closures have on everyone involved".
He said the company had launched a number of new initiatives such as "delivery, order at table tablets, the automation and diversification of our loyalty program and continued menu development".
"Each of these initiatives has been communicated to franchisees and worked on with input from the franchising community to deliver a result appealing to our customers and franchisees, ensuring transparency," he said, adding he was not "in a position to comment on conversations we have had regarding legal matters or franchising agreements with individual franchisees".
"Over the past 30 years of operation, we have built a fun and relaxed atmosphere, and I am disappointed to hear that there have been allegations to the contrary," he said.
"I personally, and we as a brand, take these types of claims very seriously, and in any instance where allegations like this are made they are investigated and dealt with confidentially."