Adelaide bars and pubs experiencing toughest trading conditions in a decade
WITH so many pubs and small bars Adelaide is spoiled for choice when it comes to having a drink. But with some of our historic venues closing their doors, we investigate the struggles of our city hotels.
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IT’S a sobering time for many Adelaide pubs. Over the past two years we’ve seen the boom of the small bar energise our city streets like a midnight jagerbomb but quietly, behind the scenes, many larger pubs that once hosted long nights, served up great food or were treated to stunning renovations have closed their doors.
In recent years “closed” signs have gone up in the Whitmore Hotel, the Brunswick, the Stag, the Colonel Light, the Dog and Duck, the Duke of York, the Tivoli, the Marble Bar (followed by its replacement, the Chiaro Bar), the Crown and Sceptre, the Directors and the Hampshire.
But you’d be forgiven if you didn’t notice these closures. Simply put, we are spoiled for choice. Australian Hotels Association SA general manager Ian Horne says operators are experiencing some of the toughest trading conditions of the past decade as venues are challenged by little or no revenue growth while struggling with increasing costs including utilities, labour and rates and taxes increasing by more than double CPI.
So with rising costs and increasing competition with the introduction of small bars, how can the old guard survive?
“Population is the key,” Mr Horne said. “Adelaide was the third largest Australian city until the late 1970s, but now sits a long way back at fifth, with the gap widening based on predictions to 2050.
“That reality impacts on retail spend, infrastructure capacity, economic activity and the capacity to attract investment. In the last 15 years the supply side – number of new liquor licences – has grown at an extraordinary rate compared to any other city but demand has stagnated.
“Add to that a recent report which confirms SA has the most liquor licences per head of population and competition is a major factor with new licences increasing by more than 40 per cent since 2003.”
South Australia now has almost 6500 liquor licences, nearly 2000 more than in 2003. To put that in perspective, the latest ABS figures show that South Australia’s population grew by 11,200 people last year compared with Victoria adding 109,000.
Small-bar licences were first introduced to SA in 2013 but limited to the CBD. More than 70 have opened and Mr Horne says they have filled a niche and have added a momentum to some areas of the CBD – but they too are not immune to the same struggles their larger cousins face. “In the context of the bigger picture they have added to the attraction of the CBD, not detracted,” he said.
“However they are now no different from the existing pubs, clubs and bars. They compete for the same declining market share but still have to pay the bank first, the rent next, wages and employment costs, power and utilities.”
And if they are moved to the suburbs it could only make matters worse. Mr Horne added: “I think it would come at the cost of pubs, bars – large and small – and hospitality enterprises of all types in the CBD generally.”
One prominent member of the hotel industry who asked not to be named said it was only a matter of time before we saw a number of small bars closing as originators continue to pull crowds while the new kids on the block struggle to find their audience beyond the initial excitement of opening. Adelaide hotelier Piers Schmidt, who has been involved in venues like the Union Hotel, the Tivoli, Gilbert St Hotel and Cumberland Arms, says it has been tough.
“Our pubs are going well but it has been a depressed market over the last couple of years,” he said.
“The introduction of the small bar licence has been a blessing for the city of Adelaide but it has certainly put a lot more competition in the same market. The small bars are feeling the pressure too.
“We’ve witnessed a lot of pubs over the years close and there’s almost one every six months to a year that close or go into receivership and reopen – it hasn’t been easy.”
Mr Schmidt said the key was to remain relevant.
“We did a major renovation and we’ve always had a focus on food, which small bars don’t necessarily have,” he said of the Union Hotel. “You just have to provide the best you can for your patrons.”
One bar that has remained relevant – ironically for its lack of renovations and fanfare – is the Grace Emily. With a focus on live music, no frills and cheap beer, without a daybed or poker machine in sight, the Grace Emily seems to be the exception to the rule.
The recent annual live music census conducted by Music SA again confirmed that around 82 per cent of all live gigs are hosted in hotels and traditional pubs like the Grace.
“Two of us here work 60 hours a week to keep the place going,” said publican Symon Jarowyj.
“We’re a different kettle of fish being live music and no pokies – so we’ve always had to work hard. A lot of small bars have opened up and hit the market quickly but I think in the long run it’s really good for Adelaide.
“There are too many venues so we need to try to retain the younger crowd from moving to places like Melbourne.”
However, Mr Jarowyj added it wasn’t just pubs that were feeling the squeeze with the state’s economy dragging the chain.
“A lot of city businesses are feeling it at the moment,” he said. “With our unemployment rate the way it is, a lot of places are struggling.”
Attorney-General and City of Adelaide Minister John Rau said the market would decide whether we were approaching saturation point for liquor licenses in the city.
Adelaide city’s population was 23,169 at 30 June 2015 – up 2.1 per cent in the financial year compared with statewide growth of 0.8 per cent.
“The city centre is actually one of the fastest growing areas in South Australia,” Mr Rau said. “The market shifts its preferences from time to time. Some business models adapt well, others do not.”
And in terms of the importance of the older pubs to the state, hotelier Piers Schmidt sums it up well.
“We are losing the history of Adelaide when a pub closes its doors,” he said.