Keystone, which also owns a suite of popular Sydney pubs and popular lunch haunts, including Cargo Bar, Bungalow 8, Sugarmill​ and Kingsley's, fell into the arms of receivers this week when its international lenders, who are owed nearly $80 million, pulled the plug. All venues remain open for business while Ferrier Hodgson tries to sell the businesses, either standalone but more likely as a break up of disparate businesses around the country. Food and beverage group Keystone are selling their waterfront icon Cargo Bar. Immediately, mutterings on the impact of Sydney's lockout laws and expensive weekend penalty rates were whispered as contributing to the collapse. In reality, a far simpler story emerges – overreach in the competitive world of food and beverage and too much debt. Sydney's pub and restaurant industry has witnessed endless boom and bust over the past decade. For every success story like the Hemmes​ family's Merivale, there's a front bar filled with despairing investors drowning their sorrows over what went wrong.

Keystone was founded around 2000 by two well-known Sydney pub families, the Duncans and Shorts. They began with Cargo Bar, which became a hot spot for revellers during the Sydney Olympics. Fraser Short who was a key player in Keystone. Sons John Duncan and Fraser Short took over the reins but increasingly different family members wanted to go in different directions. Some wanted to get into food and beverages and targeted Pacific Restaurant Group, which owned franchising rights to Jamie's Italian, paying $27.5 million for a business turning over $58.9 million. Others wanted out. John Duncan outside Newtown Hotel, formerly owned by Keystone Group. Credit:Edwina Pickles

Perhaps not surprisingly, a deal involving some of the more popular haunts in Sydney – a town where lunch is a favourite business pastime – attracted some prominent investors. Amongst them are former Network Ten boss and Keystone boss Grant Blackley and JP Morgan investment banker Rob Priestley. They must now wait to see how much the sale process raises to pay off debt before seeing what their stakes are worth. Grant Blackley has been caught up in the Keystone collapse. Credit:Robert Shakespeare PRG shareholders included former Wallabies Phil Waugh and Steve Lidbury. Waugh appears to have offloaded his stake while Lidbury stayed in Keystone. Several industry insiders point to the deal as when Keystone took its eyes off the ball. It's one thing running a pub, they say, but the fickle and highly-competitive world of food and beverage is another. For starters, the Jamie's Italian businesses were spread around the country.

One investment, The Stables at Royal Randwick was singled out as bleeding cash with little patronage outside of race days. While Sugarmill is in the Sydney lockout law area, receiver Morgan Kelly dismissed any impact of the lockout laws on the business. "You can't draw a causal line between lockout laws and the appointment [of receivers]," he said. International financiers KKR, known as the "Barbarians at the Gate" for their hard-nosed business dealings, and Olympic Capital Holdings Asia provided a debt facility worth $80 million which Keystone drew down fully. According to the most recent financial accounts Keystone was quickly in trouble. It reported a $20 million loss in 2015. It breached covenants with its lenders. Its auditors PwC questioned whether the business could remain a going concern. It was paying interest of up to 8 per cent.

​Lenders demanded shareholders inject $5 million extra capital. And they demanded yearly savings of $9 million and a raft of asset sales. The Newtown Hotel has been sold while Cargo Bay, Sugarmill, Kingley's Woolloomooloo and Bungalow 8 are on the market. Former Wallaby Steve Lidbury who is a Keystone shareholder. Credit:Rick Stevens The lenders this week informed Keystone's boss, former Macquarie banker RIchard Facioni, and executive chairman Warren Duncan, they were pulling the plug just ahead of a $25 million repayment due on June 30. Receiver Morgan Kelly from Ferrier Hodgson, who is trying to sell the businesses, says the group is a "great collection of businesses, with a broken balance sheet". Administrator Kate Barnet from Bentleys will hold a first meeting for unsecured creditors next Friday. JP Morgan's Rob Priestley has been caught up in the Keystone collapse. Credit:Louie Douvis

Mr Kelly said he was in talks with Jamie Oliver's representatives over the continued use of the franchise agreement. ​A statement from Oliver's empire this week distanced itself from the ordeal: "Our restaurants in Australia and New Zealand operate under a franchise model with Keystone Group. "The news regarding Keystone is in no way a reflection on the performance or success of the Jamie's Italian restaurants in the region, which are all trading really well and are in fact among the best performing in the world."