Cafe chain Max Brenner falls into voluntary administration amid declining sales throwing jobs of 600 workers into air

Chocolate cafe business Max Brenner has fallen into voluntary administration, becoming the latest victim of difficult market conditions in recent months.

McGrathNicol were appointed voluntary administrators of the business on Sunday and have said the company’s 37 stores will continue to trade while the business is reviewed.

The jobs of about 600 staff have been made uncertain by the administration, which follows a wind-up notice issued with ASIC on September 14.

McGrathNicol partners Barry Kogan, Kathy Zosou and Jason Preston pointed to “escalating costs and tighter retail trade” as notable factors leading to the administration.

Administrators are assessing the possibility the business could either be sold or recapitalised.

The Australian franchising rights for Max Brenner are owned by Tom and Lilly Haikin, who brought the Israeli-born brand to Australia in 1999.

The business has 15 stores in NSW, five in Victoria, 12 in Queensland, two in Western Australia, two in the ACT, and one store in South Australia.

Internationally the Max Brenner brand trades in the United States, Israel, Japan and Russia.

Earlier this year Max Brenner revealed plans to open up to seven more stores in Australia in 2018, and a store opened on the Gold Coast late last year.

But it appears as though the company has fallen on tough times in recent months.

Others in the market have also struggled, including 50-store chain Oliver Brown, which fell into voluntary administration earlier this year.

Retail Food Group’s Gloria Jeans and Donut King businesses have also struggled with prevailing market conditions as late, with the listed franchisor reporting a $306.7 million loss for the last financial year.

Queensland University of Technology associate professor Gary Mortimer says consumer purchasing behaviours are changing, and companies which aren’t responded adequately will struggle.

“Max Brenner offered decadent, chocolate sweet treats and drinks. Yet, consumers are looking for healthier alternatives, less sugar, less fat,” he tells SmartCompany.

“While there will always be a market for hot chocolate and waffles, the market continues to contract (a little like soft drinks). Opening more and more stores into a decreasing market is never a good strategy.”

SmartCompany contacted Max Brenner for comment but did not receive a response prior to publication.

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