Bars and restaurants across Australia failed at the fastest rate on record last financial year – a grim reflection of the state of the struggling sector, new data shows.
As consumers retreat from discretionary purchases, the day-to-day costs of running a restaurant, including food and energy-related costs, have risen, as have rising interest rates, pushing popular businesses to the brink.
Cafes, restaurants and small retailers recorded a disproportionate increase in insolvency appointments in the 12 months to June 30 this year, according to the Australian Securities and Investments Commission (ASIC).
The number of food service spills jumped 50 percent to a record 1,667, compared to the previous high of 1,114 in fiscal 2023.
At the same time, bankruptcy appointments in retail increased by 42.2% to 768 cases.
Restaurant and Catering Australia CEO Suresh Manikman said it had been one of the toughest periods the sector had ever faced.
“Higher interest rates, cost-of-living pressures, more expensive products and the cost of energy are all having an impact,” Mr Manickman said. Australian.
Compared to this time last year, people have less money in their pockets and less ability to pay and leave home, and therein lies the problem facing the sector.
The Australian Bureau of Statistics (ABS) recently revealed that monthly household spending on hotels, bars and restaurants has fallen by 13% since the end of 2023, slightly outpacing the decline in spending.
Earlier this month, credit reporting firm CreditorWatch predicted that 9.1 percent of jobs in the industry would be lost next year as the central bank may be forced to keep interest rates higher for longer to control inflation.
“Businesses will have to endure high interest rates long after consumer demand has weakened sharply and discretionary spending has weakened significantly,” said Anke Thompson, chief economist at CreditorWatch. Sydney Morning Heraldcalled the situation a “perfect storm”.
Richard Forbes, CEO of Independent Food Distributors Australia, also warned that customers could expect to pay significantly more for food and drink unless action was taken to address the rising costs of doing business.
He told news.com.au that distributors have experienced a 30 per cent increase in the cost of food over the past three years, which is then reflected in how much consumers spend. Rent, insurance, gas and energy bills are also increasing.
“Our average member faces an energy bill of $25,000 a month – not annually, per month,” Mr. Forbes said.
“All of these costs have to be absorbed. And at the end of the day, when energy costs, insurance, rent, fuel and labor costs add up throughout the supply chain, people end up paying more for their coffee. “Slices of carrot cake, their food in a restaurant, parmigiana in a pub, are consumers.”
Mr Forbes stressed that cafes should not be blamed for raising prices as businesses were simply trying to survive in an “unsustainable operating environment”.
“They don't raise prices because they want to make more money,” he said.
“They just raise the prices of their products to survive, it's that simple. And if we don't see that kind of relief that's needed, then the prices of your everyday products outside your home will continue to rise.”
Mr. Forbes said governments at the state and federal levels must take immediate action to improve the operating environment for businesses.
“(The government) recognizes that small businesses, which make up 97 percent of all businesses, are the engine of our economy, so the government must follow through with action. “We need cheaper energy and we need it now.”
that in Australian Today, Mr Manickam also urged the government to invest in apprentices and trainees to ensure that the industry has access to qualified workers.
