Rising power bills hit SA hospitality operators, electricity costs up 30 per cent

SA hospitality operators are struggling under the weight of skyrocketing power bills which have shrunk profits and left some cutting their own super to survive.

South Australian hospitality operators are struggling under the weight of skyrocketing power bills which have shrunk profits and left some cutting their own superannuation just to survive.

Business owners both big and small have told The Advertiser how electricity bills have risen “exponentially” in recent years – and up to 30 per cent in some cases – leaving operators under pressure to keep their doors open.

Many have resorted to changing their energy providers regularly or entering into payment plans just to make sure they can pay their growing bills.

Josh Rivers, who owns four hospitality businesses around Adelaide, including popular Brighton Rd cafe CREAM, said electricity prices have “gone through the roof” in recent years – with no explanation.

Mr Rivers said his power bills jumped 30 per cent from 2022 to 2023, up to a mammoth $20,000 a quarter, before he switched to a subscription-based energy provider this year, saving about $7,000. But he said it’s not enough with further increases on the horizon.

“It’s still huge. Power bills have exponentially risen each year and there’s no reason for it, there’s no clarity,” said Mr Rivers.

“What’s changed? Is there a shortage? Power companies are doing it because they can abuse people and we have no choice (but to pay).”

Mr Rivers said profit margins have shrunk across the industry, especially among smaller operators, claiming that up to 80 per cent of business owners were no longer paying themselves superannuation to cut costs.

“Everything is going through the roof and we can’t jack our prices up because people can’t afford to buy an $8 coffee,” he said.

“Profits are almost non-existent given the state of the economy. We’re just working to stay alive.”

Owner Josh Rivers at his Diamond Burger joint in Glenunga. Picture: Tom Huntley.

It’s a similar story for Adelaide hotelier Greg Maitland, who estimated his energy bills had risen by about 30 per cent, or “hundreds of thousands of dollars” across his six venues over the past three years.

The GM Hotels Group owner said the “substantial” increase had stunted business growth as he battled additional costs passed on by suppliers.

“We’re working very hard just to hold the same spot, basically. There’s enormous pressure on hospitality businesses,” he said.

“For a smaller business, a family operation, it would be incredibly hard. You’re just working to employ everyone.

Mr Maitland said the group – which includes the Pier Hotel, The Paradise Hotel and The Whitehorse Inn – had tried solar panels and LED lighting across their hotels but saw little bill relief.

“A lot of our pubs are big venues catering for small windows of full capacity... and you can’t turn off the fridges or the airconditioners. We’ve got to keep it all running,” he said.

So far, they haven’t passed the increase to the consumer but Mr Maitland said inevitably, the price of food, drink and accommodation will have to rise in line with the growing cost of doing business.

Greg Maitland. Picture: Keryn Stevens

Some of the state’s most well-known businesses revealed this week how power hikes are crippling their companies. Drakes, Seeley International and Angove Family Winemakers are among the businesses that are grappling with increases of up to 60 per cent.

Little Juniper Distilling Co owner and distiller Stuart Mackenzie said power prices were the biggest increases to hit his business over the past 4.5 years – rising more than a quarter in 2024.

“It has definitely increased, probably by a third, but we’ve had increases across the board,” he said.

“Opening during Covid was tough but it’s about as tough now. We’re spending more to make less.”

Mr Mackenzie said the business would be expanding to Nairne soon to make rum and whisky, and would operate with other distillers and brewers.

“Obviously electricity is a big factor for us and when we’re looking at making new products, our electricity prices are going to skyrocket,” he said.

“When you look at growing a business, it doesn’t happen overnight.”

The alcohol excise will also apply to the expanded operation when Little Juniper goes from producing about 11,000 bottles a year to 14,000 bottles.

Imperial Measures Distilling founder and distiller David Danby said his quarterly power bill was about $3700, but had entered a weekly payment plan with his provider after suffering an unexpectedly large bill about nine months ago.

He said the weekly payments meant it was manageable, and solar panels fitted to the Thebarton distillery about four years ago have done little to reduce prices.

“Small businesses are cashflow focused and are about being able to make it all work,” he said.

“Being able to cover something over time, you can see week-to-week amounts rather than being a substantial bill landing.”

Mr Danby said he was looking to optimise the solar system in the future to improve its efficiency and hopefully reduce the power bills.

Fabian Folghera, with wife Halie and kids Jasper 4 & Lilah 2, owners of Banksia Tree cafe in Port Adelaide. Image/Russell Millard Photography

Fabian Folghera, owner of popular Banksia Tree Café in Port Adelaide, said he reviewed his power bills each quarter and regularly changed operators to get the best price.

“You can get stung if you don’t,” he said.

Solar panels, which he had installed on the roof of their building in 2021, had also helped, he said. But Mr Folghera estimated electricity bills were still up about eight per cent, year-on-year, at his small cafe.

“We’ve never had it not go up (power prices) – it happens all the time. It’s not unusual,” he said.

“It’s always a juggling act to try and make sure that you can still offer a product at a decent price that still makes your business profitable. As an owner, that’s my job.

“But it’s definitely harder than it has been in the past.”