Hospitality businesses look for new ways to stay afloat
Australian hospitality businesses face major challenges to stay afloat as they battle cost of living challenges.
A study conducted by Uber Eats, the Restaurant and Catering Association (R&CA) and MasterCard, titled The Pulse Check: Restaurant Report 2024, showed cafes and restaurants across Australia are failing at the fastest rate on record.
Meanwhile, the Australian Securities & Investments Commission (ASIC) there was a disproportionate growth in insolvency appointments in the 12 months to June 30 this year.
Th insights from this third annual investigation into the state of the Australian restaurant industry has been shared with merchants, industry participants and policy makers.
“In our conversations with restaurants there doesn’t seem to be a singular factor they isolate, but rather … several themes including higher rental costs, competitive pressures, supply chain issues, growing insurance premiums, increasing utility and wage bills, and more expensive raw products,” Uber Eats Australia managing director, Ed Kitchen told news.com.au.
R&CA CEO Suresh Manickman called the current situation “one of the most challenging economic landscapes in recent history … impacting the ability for the sector to operate”.
Venues are battling increasing costs and diminishing revenue, with four in 10 restaurateurs surveyed for The Pulse Check report being in a more difficult financial position than a year ago.
Larger restaurants (those with more than 10 employees) are faring worse.
“They’re putting every element of their business under the microscope to either find ways to reduce their operating costs or in search of incremental revenue,” Kitchen said.
He also said partnering with on demand food delivery (OFD) services like Uber Eats has helped.
One in four participants in the study reported that the additional revenue from using an OFD platform had been crucial in keeping their business afloat. Nearly half (42%) said their profit had increased by between 21% and 40%, while 27% indicated that OFD sales accounted for 41% to 60% of their total revenue.
In comparison, while on-premise spending grew by only 3.3% year-on-year, digital transactions surged by 12.5%, a "vital boost" for many struggling restaurants, according to Kitchen.
San Pancho Mexican Taqueria owner Umesh Datwani told news.com.au, “we need to make sure we meet the community’s expectation for us to do our part to win and keep their business”.
“Using online food delivery apps like Uber Eats gives us a reliable revenue stream without the additional cost of hiring an in-house delivery team.
“And without that extra cost, we can focus our resources on the kitchen to meet our sustainability commitments to minimise food waste.”
It’s not all bad news. According to Kitchen there is still local support.
“Eight in 10 restaurants we surveyed for our report said that they feel supported by their local community – whether that’s dining out or ordering in.
“What our report also surfaced was that there’s more growth coming from online ordering than there is from on premise, so restaurants will continue to invest their energy into both dine in and takeaway to capture the demand that continues to exist for both experiences.”
Jonathan Jackson, 3rd October 2024
