Little Caesars Australia collapses under debt mountain
When the American pizza giant landed Down Under in 2014, it had its sights set on Aussie domination. Now just six years later, Little Caesars Australia has crashed into administration.
Despite having over 60 years of success and a network of over 4000 restaurants in its home country, the heritage pizza chain has struggled to make an impact in Australia. Over its tenure, 14 Little Caesars Australia restaurants opened, under the direction of local franchise Ernest Koury.
Koury once spruiked the chain’s ability to compete with established brands Domino’s and Pizza Hut, however, a saturated fast-food market and competitive consumer landscape forced the closure of half its outlets.
Things went from bad to worse, however, and in October, Evo Pizza Pty Ltd, operating as Little Caesars Pizza (Aus) was forced to appoint administrators, citing ongoing cashflow difficulties and trading losses.
According to reports from NewsCorp, the chain had posted on Facebook that it was searching for a new Australian franchisee earlier this month, suggesting that the stores had been voluntarily closed by Koury.
But the troubles were far from over.
Little Caesars Australia debts
The Courier Mail reported that administrators Andrew Spring and Trent Devine of insolvency firm Jirsch Sutherland found that Evo and related company Esca Distributing, an entity used to buy and distribute raw materials for stores had debts in excess of $8m.
The report revealed that Evo Pizza’s creditors totalled $5.7m while Esca Distributing’s debts hit $2.86m.
The administrators had continued to trade the remaining Little Caesars Australia stores until last week, when they all shut up shop. But in a twisting and turning case of misinformation, the attention turned to the chain’s investors instead.
Little Caesars cryptocurrency crisis
On Tuesday, reports revealed that the chain’s largest investor was Nevada-based cryptocurrency business Bitwealth Holdings LLC.
According to The Daily Telegraph, Bitwealth, led by Colorado man Matthew B. Goettsche poured $14m into the chain in 2017, prompting openings at Newcastle, Orange, Bathurst, St Marys, Darlinghurst, Surry Hills and Lake Macquarie. However, in July the company became concerned about a “lack of reliable information being provided from the director”, Mr Koury.
Now, just a few months later, Little Caesars Australia is in administration and Goettsche is in custody, accused of masterminding a $1.03bn global bitcoin fraud.
Indictment papers reveal that Goettsche, along with two other associates have been charged with conspiracy to engage in wire fraud in connection with their roles in BitClub Network. The trio allegedly solicited money from investors in exchange for shares of purported cryptocurrency mining pools, rewarding investors for recruiting additional investors.
While Koury isn’t facing any charges himself, the Little Caesars Australia franchisee has reportedly up and left the country, with administrators unsure of his direct whereabouts. Despite the lack of information, reports indicate that investigations are ongoing and the administrators are continuing to work alongside Koury to understand the business’ current circumstances.
All Australian stores remain closed.