140 insolvencies in food and accommodation in April despite high appetite for dining out
In a post COVID world, a full restaurant doesn’t mean it isn’t struggling.
“They are trading very well, but the cost side is getting them,” CreditorWatch chief economist Anneke Thompson. said.
“Being really busy is not necessarily a plus – the more customers you have, the more your costs are.”
“How much can you charge for a steak before you turn customers away?”
Owner of the European Hotel Mario Di Nardo knows those pain points intimately.
Di Nardo opened The European Hotel in 2019 following a $6 million development of the iconic St.Kilda site. The venue was billed as a “reimagining of a St Kilda icon”.
It included casual eatery Rafaels, modern Italian dining at Crudino and cocktails and canapés at the Melbourne Lounge.
It finally opened in November 2021 after three failed attempts dating back to February 2020.
However, it is now shut.
Di Nardo said the costs were too high to run the properties and that it would cost $500,000 to train the 25 staff required to run the hotel for the first two months.
He told The Age, “I’m saddened because I, personally, cannot keep funding the venue,” Di Nardo said.
“I would love to continue but I can’t continue. I don’t have the energy or the capacity financially to continue at all.”
He is now selling the business.
“We are wanting to sell it to a great operator who’s got the capacity to take on a large venue that has a vision,” he said. “It’s a great opportunity for them because all the work’s done. The fit out is impeccable.”
140 food and accommodation businesses became insolvent in April alone. Other than construction, hospitality is hurting the most.
“You look around and it’s really busy, but you see the stress on the faces of the restaurateurs,” Thompson told The Age.
“The same number of people are coming though their restaurants as pre-COVID, but their bills are much higher.
“It is similar to construction, but it is not as clear-cut.”
The costs of rent, gas, electricity and produce have all gone up.
Jonathan Jackson, 8th May 2023
