Second lockdown in Victoria has devastating impact on restaurant scene … but there is hope
Victoria is in the midst of its second lockdown and once again the hospitality sector is suffering.
This time around however, it’s slightly different, with internal travel restrictions further decimating an already fragile industry. No longer can you drive tens of kilometres from your home to your favourite restaurant for take away.
In order to stay open, many restaurants have moved to an online ordering service for delivery. The problem is, as great as it is to be able to keep these restaurants running, it still means a loss of revenue and reduction in work hours for employees.
Mark Calabro, co-founder of hospitality technology platform HungryHungry, feels the Andrews government has made the right decision in shutting down the industry again, but believes it should have been done faster.
HungryHungry offers a suite of products and services to the hospitality industry including digital menus and at the table contactless ordering technology for in venue as well as full online functionality for venues to facilitate their own delivery, takeaway and pick up ordering.
“A lot of people I know in the industry said the first shutdown should have been pushed further out until late June. This would have given the government more time to try and eradicate the virus, which I don’t believe has proven successful in any country,” Calabro tells Australian Hospitality Directory.
However, a longer shutdown the first time around, may have mitigated the need for a second round of closures.
In this current state, we can only guess what the economic impact of this lockdown will be. Figures from the Australian Bureau of Statistics (ABS), show Australia has 47,456 foodservice outlets (restaurants, cafes, caterers) that employ in excess of 450,000 people. It would seem hospitality was a thriving industry pre-COVID, yet high wage, rent and food costs mean the average profit margin is just 4.4%.
This has been eroded to devastating effect, with many restaurants shutting their doors and potentially many more closures to come.
Looking at the country as a whole, according to industry market researcher IBISWorld Australian restaurant revenue declined by 25.1 per cent from $19.7 billion in 2018-19 to $15.0 billion in 2019-20.
ABS data shows more than a third of Australia's accommodation and food services employees lost work between March and April, as COVID-19 restrictions began.
Treasury estimates released in May forecast 441,000 jobs would be lost in the hospitality sector.
The small light, is that with more people working from home, there has been a rise in revenue for suburban restaurants, particularly in Victoria which remains in lockdown.
The downside is this comes with a decline in revenue for city-based venues.
In relation to city venues, Calabro says, “some of the predictions that we will lose 30% of city venues could very well be a sad reality.”
There are numerous restaurants and cafes in danger of shutting down permanently. Many of these venues were struggling well before the pandemic and it is those that are most unlikely to survive.
After the first lockdown ended, Melbournians flocked to restaurants in droves giving venue owners hope of recovery.
“The difficult part was being able to navigate through limited capacity and making that work,” Calabro says.
Despite the second lockdown that hope still remains.
“The second restart I think will be easier in many respects as venues can roll straight into service, rather than having to navigate through all the guidelines, train staff and purchase the necessary equipment and products to ensure sanitisation and hygiene.”
He also suggests that now is the right time for the industry to put everything in order for a successful re-open post second lockdown.
Calabro urges vendors to, “Use the downtime to focus on strengthening and refining your systems and processes. It will be spring time before we know it and everyone will want to be out in the sun after a long cold winter stuck indoors.”
It is also important for restaurant owners to reset their mindset, as going back to the way things were before lockdown is unlikely to happen at any point in the near future.
Embracing technology will be a key factor in the success of any business in this new world.
For the hospitality sector, there is now an abundance of technology out there that could help with all sorts of operational activities.
“This industry is made of very resilient people who don’t roll over and give up easily. It is a tough industry and I think there will be a lot of opportunity on the other side.”
Jonathan Jackson, 30th July 2020
