Owner of failed food outlets says Covid ‘killed’ turnover
The owner of two outlets of a national fast-food chain in liquidation has said the pandemic “killed” the businesses, resulting in a debt of more than $300,000 to Inland Revenue.
Shamiana in Commercial Bay and Westfield Mall Albany went into liquidation on April 18 after both companies “suffered a steady reduction in sales over 2022” according to the companies’ first liquidators’ reports released last month.
Mamant Nawani is shareholder and director of Shri Baglamuki, trading as Shamiana Albany, and Aum Shreem, trading as Shamiana Commercial Bay. Nawani said his sublease to run the franchises were taken back by the company director after the pandemic.
“We paid a lot of legal fees to try and save the business but it still closed,” Nawani said.
“Even after Covid, we tried our best but we lost the sub-lease. We have no income now but we need to take a break.”
Nawani said high rents on retail spaces squeezed the business even further with bonds at around $350,000 and rent for each outlet coming to at least $25,000 a month.
Waterstone Insolvency liquidators Damien Grant and Adam Botterill released the first liquidation reports for both businesses last month.
In both reports, liquidators said the companies were impacted by Covid19 lockdowns in 2020 and 2022.
They also cited a “legal dispute” between both companies and Shamiana’s franchisor “resulting in the business[es] being unable to trade”.
“After the settlement with the franchisor, the director was granted access to the premise in late 2022,” Grant and Botterill said.
Nawani declined to comment on the legal dispute with the Shamiana franchisor.
The companies have a short list of creditors as Nawani said most debts have been paid.
Inland Revenue is claiming $223,387 and $102,042 from the Commercial Bay and Westfield Albany outlets.
Both outlets’ creditor lists include IRD, Coca-Cola Amatil and Aucklandbased meat wholesaler Chicken n
Things with third-tier lender Finance Now claiming funds from the Albany store.
In 2018, the labour inspectorate ordered Shamiana Ltd and Shamiana Enterprises Ltd to pay $33,000 and $18,000 in penalties due to repeated breaches of the Employment Relations Act and the Minimum Wage Act.
The labour inspectorate found both companies failed to pay staff minimum wage and holiday pay or keep correct employment records.
Inspectorate regional manager David Milne said the companies employed 120 staff in 22 restaurants across the country.
Then sole director and shareholder Satish Shetty passed away in 2019 leaving his son Hamish Shetty as the company’s director.
Milne said: “We’ve had several complaints dating back to August 2015 of [Satish] Shetty not upholding his staff’s basic employment rights.
“The continuous nature of these breaches, despite remediation at the time, shows that Mr Shetty wasn’t taking his obligations as an employer of 120 staff seriously,” he said.
“It was surprising that even after several complaints to the inspectorate, Mr Shetty was not deterred from underpaying his staff. One of the
breaches uncovered was for unpaid work trials for staff — a practice that’s illegal under New Zealand employment law.
“Employers should understand that the Inspectorate follows up earlier non-compliance with a zerotolerance approach. Additional strong penalties will be sought where any ongoing non-compliance is found,” Milne said.
“Not only is underpayment and mistreatment at the detriment of employees, it also gives companies an unfair commercial advantage over their law-abiding competitors.”
In October 2016, an employee of both Shamiana and Shamiana Enterprises made a complaint to the inspectorate alleging an unpaid work trial and payment of less than the minimum wage.
After investigation, Shetty paid $2415.98 in minimum wage arrears to the complainant and ended the company’s unpaid work trials.
In July 2017, the labour inspector received complaints from two more Shamiana employees who said they had not been paid holiday pay when their employment ended.
Following an investigation, Shamiana paid the employees $20,500 and $1189.25 respectively as unpaid holiday pay.