New operator set to take on Lagoon Restaurant while it’s more of the same at Diggies

In an apparent rush to the 2025 finish line, Wollongong Council will next week decide whether to introduce a new operator at the iconic Lagoon Restaurant while retaining the current operator at the popular Diggies and North Beach Cafe.

Council staff are recommending the iconic Sydney-based Grounds of Alexandria Pty Ltd be granted the new Lagoon lease on a five-year plus five-year option basis. Surprisingly, only two tender bids were received for the prestigious Lagoon property. Up the road at Diggies, there’s likely to be no change. North Kiosk Pty Ltd is recommended to take on an extended 5+5+5 year lease after a hastily organised rerun of the tender process.

As reported previously, what should have been a relatively simple tendering process for the lease of two prime casual waterfront dining locations at North Wollongong has, in the eyes of one keen Council watcher turned into a bit of a mess.

The first report to Council – which was released publicly – was rewritten, removing General Manager Greg Doyle from any part in the process. Mr Doyle left the room when Council deliberated briefly (for about two minutes) at its 17 November meeting and Council unanimously accepted the staff recommendation to not start the tender process over from scratch but instead give the three businesses who’d lodged conforming tenders the opportunity to resubmit. 

The small matter of a non compliant tender

It’s assumed the three original ‘compliant’ tenders were all within the scope of the formal tender criteria, namely for a five-year lease with an option of a five-year extension. 

In the business paper to Council it was reported this way: “The individual tender responses have been reviewed and are noted for their complexity and ambiguity, including alternate non conforming submissions.” 

Those two words “non conforming” usually set alarm bells ringing for anyone involved in a competitive tender process. Yes, tenders can be “complex” but if a submission is “non conforming” that usually means game’s up for that tenderer. No second chances. The Illawarra Flame has no knowledge which tenderer, or how many of the three were “non conforming”.

Council has now chosen a new way forward, proposing a five + five + five year tender agreement (that’s 15 years, not 10 years as originally proposed). Could it be that the idea of a 5+5+5 year tender was actually submitted by a ‘non conforming’ party in the original process? Council chose not to respond to this question when we put it to them.

Why not just start again?

It does beg the question, for a whole bunch of reasons, why, given how messy this leasing saga has become, wouldn’t Council just clean the Diggies tender slate and start again, maybe attracting an even stronger field in the process?

On face value, that would certainly remove the confusion and potential reputational damage to Council, any potential questions over due process, and most importantly give our Council a better opportunity to get best possible market value for this valuable beachfront rental property. After all, a big revenue win for Council is a big revenue win for everyone in the city. And if we’re talking a potential 15-year deal on two of our city’s most popular casual dining venues, we ain’t talking small bikkies here.

While Council reported a possible 132 percent increase in rental under the first tender process, there’s no information given with the latest recommendation to stay with the status quo at Diggies.

Is this really the best time to be running these tenders?

Diggies has been operating on a monthly lease since the previous lease expired in April 2023.  That is 31 continuous months. Why did Council feel the need to rush into a new tender and lease agreement just a matter of months before highly disruptive work is set to start on the multi-million-dollar extension of the North Beach sea wall which Council says will require the closure of Diggies and the popular adjoining beachfront cafe for a minimum of six months? 

Who knows, it could be a 12-month construction project, or longer, based on how long the first stage of the sea wall in front of the surf club took to be completed. 

We asked Council if it wouldn’t have been more prudent to extend the current monthly lease arrangement for a few months until Diggies and the adjoining cafe were due to close in February 2026, the time the sea wall construction is due to commence? That way Council could go to market afresh, perhaps late next year, with no disruptions to trading, and major refurbishment works completed on the two food outlets. In that way, it maximises the opportunity to get the best possible result for ratepayers which should always be the end game for a Council, aiming to get the most revenue possible from its limited asset base. Council chose not to answer this question.

Council’s stated desire to have a grand reopening of Diggies and the cafe once the sea wall works are completed can still happen, possibly in early 2027 if the sea wall work is finished then.

How well was the opportunity promoted?

After Council went to market for Diggies and later the iconic Lagoon Restaurant, we asked a series of questions about the extent and reach of the marketing/media/promotional campaign outside the Illawarra, to ensure there was the strongest possible field of quality and experienced food and beverage operators salivating at the prospect of getting a piece of the action; especially given these two renowned properties hadn’t been to market for a long time, and in the Lagoon’s case, not in 40 years. 

What prompted our question on the marketing effort was the fact that only three parties submitted tenders for the hugely popular Diggies North Beach cafe properties, with just two tenders for the iconic Lagoon, arguably this region’s best known and most highly awarded restaurant over many decades. 

We asked Council how widely the tenders were promoted, what marketing budget was involved, what efforts were made to engage with the nation’s media and food industry to give these rare and prestigious tender offerings the best chance of a windfall win for Council and its ratepayers. 

The official response provided no insights into council’s marketing campaign or its total promotional budget. 

People who operate successful restaurant businesses in Wollongong told The Illawarra Flame, they saw and heard nothing about the leasing opportunities through their networks. “It was invisible,” one restaurant owner told us. 

Council didn’t answer our question about the dollar amount used to promote the Diggies and Lagoon tenders. A spokesperson did say there was an advertisement on the Council website and “the tender was advertised via online listings with national and local outlets.” Council chose not to respond to our question about which national online outlets were engaged (presumably Tenderlink). To our knowledge there were no ‘free media’ (stories) generated outside Wollongong about these two valuable tender opportunities. The Illawarra Flame understands the three businesses tendering for Diggies and the North Beach Cafe were given just three working days to submit their new proposals in the last fortnight.

Public still has a chance to comment

The public has been invited to comment on the proposal to extend the terms of the lease to a maximum of 15 years. That’s up to the year 2040. This opportunity was being promoted by Council with a small sign tucked away in a garden outside Diggies. That sign, which mysteriously disappeared at the weekend, asked the public to address their submissions to Council’s General Manager by midday on Monday, 22 December 2025. That’s one week after Council is set to make a decision on the Diggies lease. The business paper to next week’s Council meeting says “no lease will be executed with the recommended party until the notification period prescribed by the Act has expired, and consideration has been given to any submissions received”.

General Manager Greg Doyle also stepped aside from any role in consideration of the new Lagoon lease. The existing lease isn’t due to expire until June 2026. The change of lease breaks a 40-year stranglehold on the prime waterfront site by the Harrison family which chose not to submit a tender proposal.

There’s always been concern over the decades that Council and ratepayers haven’t been getting best value for money rent for the Lagoon premises. Council is giving no information (at this time) about the likely size of the rental increase under the new operator, Grounds of Alexandria. 

9/12/25: Story updated