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Justin Hemmes and Merivale face delays and controversies in Melbourne expansion

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"Despite spending approximately $110 million on Melbourne properties, only one venue, LB's Record Bar, is currently operational."

Merivale’s Melbourne Push Hits Roadblocks

Merivale, the hospitality group headed by Justin Hemmes, has encountered multiple obstacles in its effort to expand from Sydney into Melbourne. Despite significant investment, only one venue is currently operational.

Key Developments

Tomasetti House (Flinders Lane)

Purchased in 2021 for about $40 million, this heritage-listed building was initially slated to open in 2023 but remains under construction. Hemmes plans a multi-level venue with a Chinese restaurant, rooftop bar, and basement cocktail bar. The project has faced delays due to contractor changes and structural issues.

Parkade Car Park (Little Collins Street)

Acquired from the City of Melbourne for $55 million in 2025, Hemmes envisions a precinct with restaurants, bars, a hotel, and a sky garden. However, the Melbourne Club has exercised a legal right to acquire a 50% stake in the existing lease, hindering immediate development. A pop-up restaurant is planned for 2026.

Kantay House (Meyers Place)

Purchased for about $15 million in 2023. Hemmes converted Lily Black's cocktail bar into LB's Record Bar, which opened in November 2024. Other tenants, including Argentinian steakhouse San Telmo, hold long-term leases, limiting further changes.

Lorne Hotel (Surf Coast)

Bought for $38 million in 2021. Only the ground floor has been renovated into Totti's Italian restaurant; the remainder of the pub remains largely unchanged. The hotel holds 10 poker machine licenses.

Controversies and Criticism

  • Underpayment Allegations: In November 2024, Merivale agreed to pay $19.25 million to settle a class action lawsuit alleging underpayment of staff between 2013 and 2019. The company did not admit wrongdoing.

  • Workplace Conduct Allegations: Investigations by The Age, The Sydney Morning Herald, and 60 Minutes in 2024 detailed claims of worker exploitation, sexual harassment, and drug use at Merivale venues. Hemmes and Merivale have denied these allegations.

  • Exclusion from Good Food Guide: In October 2024, the Good Food Guide (owned by Nine, which also owns this masthead) removed Merivale venues due to the allegations.

Local Reactions

Some Melbourne hospitality operators and patrons express skepticism about Hemmes' Sydney-style venues. However, Lord Mayor Nick Reece supports the investment, and the Melbourne Food & Wine Festival's creative director says new investment is welcome.

Property Strategy

Industry sources say Hemmes' business model relies on property ownership: buying freehold assets, opening venues to increase value, then leveraging that value for further acquisitions. Merivale's property holdings are estimated at over $3 billion.