'High tea on steroids'
There were several reasons for his business failure, but what pushed the business over the edge was Zumbo's upmarket Fancy Nance project in South Yarra, Melbourne.
Zumbo's retail stores in Sydney and Melbourne are patisseries, which sell $3 macarons, $4 croissants and $8 individual serves of cakes. Fancy Nance was a high tea room, offering $45 to $65 dessert degustation menus.
"High tea on steroids," a Guardian reviewer said of Fancy Nance's 12-course degustation menu, which started with linzer cake and "chouxmaca" (choux bun with macaron) and finished with pork rillette and osso bucco.
"Ultimately I don't recommend that anyone eat a 12-course, mostly dessert meal," she concluded.
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Foodies agreed. Fancy Nance and its shop next door Little Frankie's closed their doors only two years after the launch.
The administrators' view so far is that I'm So Fancy Pty Ltd – the registered company name for Fancy Nance and Little Frankie's – may have been trading insolvent since at least early to mid 2017.
This means the company may have been racking up debts that it was unable to repay, and could expose Zumbo to fines, compensation and more.
The only sign of solvency in the business was the fact it was receiving financial support from related companies and trusts, the administrators say.
High wages a contributing factor
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Zumbo's main retail business was not doing much better. The administrators' view is that his two retail companies may have been trading insolvent since at least mid 2017.
While the new store in the touristy area of Circular Quay in Sydney boosted the overall Sydney sales by 16 per cent in the 2017 financial year, over the same period operating expenses increased by a whooping 26 per cent.
This was mainly due to a $1.4 million wage increase that year, a 39 per cent increase from the 2016 financial year.
In 2017, A Current Affair accused Zumbo of underpaying his staff and Zumbo admitted the business had to backpay staff due to payroll errors.
Ferrier Hodgson's national specialisation leader for hospitality and tourism, Morgan Kelly, said one of the common causes of food business failing has been labour costs, particularly with the tightening of 457 skilled migrant and 407 training visas – a major source of labour for the hospitality industry.
Kelly says the industry is hyper-competitive, and having a famous chef's name attached to a retail brand can help but does not guarantee anything.
"Having a celebrity chef is a differentiator but it's not the key to success," he said.
Two years ago Kelly was appointed the receiver for Keystone, which owns Jamie's Italian restaurants in Australia.
Tax office comes knocking
The Melbourne business was also struggling. Last financial year Melbourne sales fell by 20 per cent after Fancy Nance closed and stopped buying desserts from its South Yarra kitchen, while operating expenses increased.
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Zumbo's Melbourne company continued to pay the rent for Fancy Nance and Little Frankie's after the shop closure. There was little prospect of ever recovering the money.
The extent of family involvement in the business is surprising. Despite Zumbo's retail stores having nearly $13 million turnover, Zumbo's companies were tightly controlled by him and his family, with his sister Rosalba occupying various director and secretary roles and his parents Frank and Annuziata lending hundreds of thousands of dollars to the business.
Zumbo's girlfriend and former My Kitchen Rules contestant Nelly Riggio also works in the business as retail operations manager.
'The sweet assassin'
By March 2018, the tax office was knocking on the doors of Zumbo's Sydney company 611 Pty Ltd, filing a winding up order to recover unpaid tax. The administrators estimate Zumbo owes more than $1 million to the tax office for GST and PAYG withheld as of June 2018.
Since then, Zumbo has been meeting with potential investors to sell the Lane Cove West production kitchen, which makes dessert for all Sydney stores.
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By July, there were still no takers and the administrators were called in. The administrators are still in talks with interested parties to sell the kitchen.
The administrators note it is unlikely Zumbo and his sister Rosalba will have enough assets to meet any judgment debt. The $1.7 million from the sale of the Balmain home is likely to go towards partially repaying lender ANZ.
Zumbo did not respond to request for comment.
Whatever his credential as a businessman might be, his fame as a celebrity chef may continue for a while.
Seven Network has signed a co-production deal with Netflix for a second season of baking competition show Zumbo's Just Desserts.
Also fresh on Netflix's shelves is another baking competition show Sugar Hit, with Zumbo as a judge.
"The sweet assassin," the TV show host introduced Zumbo. "He is one of the country's most celebrated pastry chefs".
