As Australia’s cafe and restaurant sector records the highest business failure rate in the economy, the industry’s peak body has a clear message: don’t blame the customers.
Restaurant & Catering Australia (R&CA) says consumer spending at hospitality venues remains solid, backed by Australian Bureau of Statistics figures. The problem, it argues, is a cost base that has spiralled beyond what margin-thin operators can survive.
“Hospitality is not short of customers. It’s short of viable margins,” said John Hart OAM, National President of R&CA.
Wages, energy, insurance, rent and compliance have all escalated faster than businesses can absorb, Hart says, leaving operators in the impossible position of trading well but still losing money.
“The maths is not working for too many operators. Costs have risen faster than any business can absorb. Revenue is there — Australians are still dining out — but making a profit is becoming almost impossible.”
“It’s a policy issue”
The organisation says independent cafes and restaurants — particularly in suburban and regional communities — are bearing the greatest pressure. These are family businesses operating on discipline and long hours, with none of the financial buffers available to larger corporates.
The cost crisis also has consequences that extend well beyond individual closures. When a hospitality business fails, it typically leaves behind unpaid suppliers, outstanding wages and superannuation, and tax debts owed to the government. “When venues close with debt, the impact spreads well beyond the kitchen door,” Hart said. “Every closure leaves suppliers unpaid, staff exposed, and government revenue short.”
R&CA is calling on the government to act on four fronts: streamlining compliance and cutting regulatory duplication; tackling insurance affordability; improving energy pricing transparency; and ensuring workforce policy reflects the realities of a seven-day trading industry.
“This is no longer an industry issue,” Hart said. “It’s a policy issue.”
The sector contributes $66 billion to the Australian economy annually and employs hundreds of thousands of people. R&CA warns that without structural reform, the cost pressures driving today’s closures will simply claim tomorrow’s new entrants.
