Upmarket Melbourne CBD eatery Calia has collapsed into voluntary administration, owing an estimated $2 million to Australian diner loyalty platform Liven and raising questions for diners with unredeemed restaurant credits.

Documents listed by the Australian Securities and Investments Commission (ASIC) show Calia Australia, which operates the flagship restaurant and retail store in the city’s Emporium shopping complex and a spin-off restaurant at the Chadstone shopping centre, appointed voluntary administrators on June 28.

Puzzle Coffee, a Melbourne CBD cafe with close ties to Calia, also entered voluntary administration the same day.

Glenn Anthony Crisp and Andrew Mattinson of Jirsch Sutherland were appointed as joint administrators for both Calia Australia and Puzzle Coffee.

Launched by entrepreneur Jason Chang in 2016, Calia boasts gourmet cuisine prepared by chefs with Michelin-starred pedigree.

With prominent Lonsdale Street frontage in one of Australia’s premiere shopping districts, Calia also offers a retail space filled with take-home ingredients, premium liquor and homewares.

Chang also serves as non-executive director of Puzzle Coffee, which operates four locations across the Melbourne CBD.

But the discretionary spending slowdown and surging costs of running a hospitality business appear to have caught up with the restaurant enterprise and coffee business.

Taking to LinkedIn last month, Chang, who was elected as a City of Melbourne councillor in 2020, said the struggles of operating the business carried a significant mental toll.

“I recently broke down in City Council when I commented on the challenges of small businesses in Melbourne CBD as well as families during this cost of living crisis,” Chang said.

“Like many other struggling small business owners in Melbourne, my own hospitality businesses have been faced with many financial challenges with the rise of operational costs,” he added, referring to wages, cost of goods sold, rent, and borrowing costs.

For now, both Calia’s Melbourne locations and Puzzle cafes remain open for business.

The administrators intend to continue trading the Calia business as they compile a Deed of Company Arrangement proposal for creditors, a Jirsch Sutherland spokesperson told SmartCompany on Tuesday.

“If this is accepted by creditors, the business will be restructured and continue on,” they said.

$2 million owed to restaurant-tech platform Liven

While inflation and gloomy consumer spending patterns are familiar to struggling restaurants, Calia’s relationship with restaurant-tech platform Liven appears to be a complicating factor in the administration process.

Liven, founded in 2014, gives digital cashback rewards to diners each time they eat or drink at a participating venue, which can then be redeemed for future purchases.

The platform also offers point of sale integrations, table ordering, and pickup and delivery solutions.

Jirsch Sutherland has confirmed to SmartCompany that Liven is a creditor of Calia, and is owed an estimated $2 million.

SmartCompany understands Liven loaned Calia funds with interest attached, and lends to other businesses using its platform.

Despite the significant debt, a Liven spokesperson told SmartCompany the company will carry on as usual.

“Their [Calia’s] current trading situation has nothing to do with us and impacts us in no way,” the spokesperson said.

Administrators, customers consider unspent restaurant credits

More contentious is the status of unredeemed restaurant credits for Calia and Puzzle Coffee.

Diners were able to pre-purchase credits for use at both venues through the Liven platform, similar to a traditional gift card system.

However, while gift card holders are usually considered unsecured creditors to a business when it enters voluntary administration, Calia says customers seeking refunds for unspent credits should contact Liven directly.

Calia stopped accepting Liven payments when its administrators were appointed, with its website advising that “customer funds have been paid to Liven and are currently held by them, not by Calia”.

“For any refund requests, we kindly ask you to directly contact Liven, as they are responsible for handling all transactions of this nature,” the company states on its website.

Similarly, the Jirsch Sutherland spokesperson told SmartCompany that “Calia is not in a position to honour food credits”.

“As the customers have paid Liven and not Calia, their claims are against Liven,” they added.

Although Liven is allowing some diners with unredeemed ‘Calia dollars’ to transfer their credits to other restaurants on the startup’s platform, SmartCompany understands Liven is treating those unredeemed Calia-named credits as the responsibility of Calia itself.

The precise value of unspent Calia credits at the time of the company’s administration is not immediately clear, but would-be customers are already asking questions about what happens next.

Customer service messages sent to a Liven user, shared on social media, appear to suggest diners with unspent credits can convert their unspent Calia credits to broader Liven rewards — or consider joining the creditor queue.

“Unfortunately in so far (sic) as getting cash return, the only course of avenue is to pursue the restaurants,” said one message, purportedly from Liven’s customer service team.

SmartCompany has contacted Jirsch Sutherland and Liven for further information.

This story was originally published on Smart Company.