Australians are feeling the sting of rising costs more than ever, especially when it comes to eating out. From cafes to cocktail bars, the hospitality industry is grappling with relentless inflation, and it’s not looking like relief is on the horizon. Small businesses, in particular, are finding it hard to stay afloat as they pass increased costs onto customers.
Inflation: The Invisible Weight on Hospitality
In the September quarter, inflation shot up to 3.2%, and businesses are scrambling to manage the aftermath. The hospitality sector, already struggling with rising rents and energy prices, has found itself between a rock and a hard place. It’s not just the high-profile restaurants and bars in the city; even family-owned spots and local favorites are feeling the pressure.
A Hard Choice: Cutting Costs or Cutting Staff?
Joe Rechichi, owner of several Italian restaurants and a gelato shop in Sydney, is one of many in the industry who has had to make painful decisions to stay in business. “I just can’t afford this anymore,” he told SkyNews.com.au, reflecting the harsh reality faced by so many. With margins thinner than ever, Rechichi had to cut staff, including the in-house marketing team, and even revamp his menu multiple times in one year to cope with the cost increases.
What’s Behind the Price Hikes?
What’s driving the skyrocketing prices? Well, it’s a combination of factors. For one, inflation isn’t just about the food – it’s the energy prices, the excise taxes on alcohol, and those seemingly small, everyday items like cleaning supplies, which are now costing more than ever. As the cost of doing business keeps climbing, owners like Dre Walters of Old Mate’s Group are forced to raise prices or risk going under.
Walters, who owns two cocktail bars in Sydney, shared that his company had to start passing along price hikes on alcohol and other essentials, a move they hadn’t made in the past.
A Change in Consumer Behavior
But it’s not just about rising costs. There’s a shift in consumer behavior too. The pandemic has left many with tighter budgets, and dining out is no longer an easy decision for a lot of people. As Walters put it, “Hospitality has never been harder than what it is today.” Bars and restaurants, once bustling with people enjoying a drink after work, are seeing fewer patrons as Aussies tighten their belts.
Small Business Owners Dipping Into Personal Savings
And it’s not just the restaurant owners who are feeling it. Small business owners across Australia are dipping into their own savings to keep their businesses running. Some, like Simon Potts of Boxes for Business, have borrowed money from their personal accounts to cover gaps in business finances. A recent report showed that 60% of small business owners can’t pay themselves regularly, highlighting the struggles behind the scenes.
It’s a perfect storm. Between government-mandated pay increases, inflation, and energy prices, hospitality owners are stuck in a bind. In some cases, it’s not just about making ends meet – it’s about deciding how much of their own well-being they’re willing to sacrifice to keep the doors open. And, let’s face it, no one wants to live on the edge indefinitely.
The Future of Dining Out: A Tough Decision
As for the customers, many are finding themselves wondering: is a night out worth it? Dining and drinking are no longer the simple pleasures they used to be, and that’s something both customers and businesses will have to reckon with moving forward.
It’s clear the road ahead for Australia’s hospitality industry is filled with challenges. But as Rechichi pointed out, it’s all about offering the best quality service, no matter the pressures. Because at the end of the day, people will still want to go out – they just might have to do it a little less often.
