Wishbone liquidation: Working from home blamed for food chain’s collapse

Wishbone had more than 100 staff and stores in different cities but multiple pandemic and inflation-related problems have been blamed for its liquidation. Photo / Dean Purcell

It had the “perfect” machinery and premises, and grew to become a well-known food company.

But the work-from-home phenomenon and a series of inflation-related pressures have been blamed for sinking Wishbone.

Wishbone was placed in liquidation last week and now a report from Mohammed Jan of insolvency firm Liquidation Management has outlined the company’s struggles, owing an estimated $2.32 million.

“Their focus was to create fresh, healthy, takeaway food aimed at busy people who wanted convenience but also taste and quality,” Jan said.

The concept was successful for years, and Wishbone grew to owning 17 locations and selling to more than 60 supermarkets.

Wellington had the most stores and Wishbone had strong brand recognition there, the liquidator said.

“The manufacturing plant is based in Ngauranga Gorge, Wellington, with the perfect premises, machinery and fit-out,”Jan added.

“The company’s core competency was being extremely good and manufacturing fantastic fresh food. The company continued to reinvest in opening stores around the country.”

Covid-19 directly affected business growth, but so did what liquidators called “the new hybrid work-from-home model”.

Jan said Inland Revenue was owed about $400,000 and staff were owed holiday pay of $329,132.

The company’s core business model was based on the bulk production of quality food products in a centralised manufacturing facility.

That helped Wishbone achieve economies of scale and labour efficiencies.

Apart from supplying supermarkets, it also had some motel and hotel customers.

But a decline in sales in the retail stores attributed to more people working from home was a serious blow, Jan said.

Inflation, recession and wage pressures also affected the business.

“The company has also incurred significant tax, and creditor debt.”

Wishbone was the brainchild of Wellington entrepreneurs Andrea Gibson Scarlett and husband Shayne Scarlett.

Wishbone founders Andrea Gibson-Scarlett and her husband Shayne Scarlett set up the company. Photo / Supplied

They started the business in 1999 and expanded into Auckland in 2004. Wishbone was ranked No 35 in the Deloitte Fast 50 list of companies in 2003.

“It is not practical to estimate the date of completion for this liquidation at this stage,” Jan added.

Some suppliers had stopped credit while others had reduced their credit limits and it made it difficult to obtain supplies, Jan said.

“The directors tried to keep the business afloat by investing more capital but ran out of cash flow and funds.”

The company tried to get investors, to no avail, and BNZ was not willing to keep supporting the company funding so this was refinanced through another private investor last year.

The business had stores mostly in Wellington, Auckland, Christchurch, and Dunedin with 110 staff.

Jan’s report said employee positions were made redundant but a few staff were kept on a casual basis to help with operations.

All up the liquidator said at least $1,036,807, including an estimated $400,000 to Inland Revenue, was owed to secured and preferential creditors.

Inland Revenue and staff were listed as the preferential creditors.

Secured creditors included Davis Trading Company Ltd, owed $159,491, Cafe L’Affare Ltd owed $84,776, and Van Den Brink Poultry Limited owed $58,271.

Unsecured creditors were owed an estimated $1.292 million.

Amounts for 10 secured creditors were still being calculated.

Jan said he had liaised with Inland Revenue and ACC and was awaiting information from them.

A few stores were kept in operation to use up the balance of the stock and salvage extra income.

Store locations had included Auckland Airport.

The airport said the menu had included muesli, salads, soups, sandwiches, breads, wraps, juices, cookies, muffins, slices and cakes.

It had offered dairy-free, meat-free, low-fat and gluten-free options.

Unite Union national secretary John Crocker last week told the Herald the sudden shutdown came out of the blue.

“I’m surprised by this. They’re a national chain, they’re recognisable, you know the brand,” Crocker said.

“It’s unusual to have something happen this abruptly.”

Victoria University last week said it was upset to see Wishbone close. A Wishbone cafe at the Kelburn campus stopped trading last Tuesday.

“The university community is very sad to see Wishbone close,” a spokeswoman said. “We have enjoyed a very good relationship with the team over the years and they have always provided great food and service to our staff and students.”