Australia’s hospitality industry in crisis: Top eateries hit by financial collapse
Surging household costs are taking a toll on Australia’s hospitality sector. Search table of businesses forced to close.
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Hospitality businesses are crumbling as cost of living pressures smash household budgets, with one in 13 small to medium pubs, restaurants and bars likely to fail in the next year.
Country pubs, the heart of local communities, aren’t immune to the pressure but some are fighting back, working with other local businesses to bolster each other.
Experts say that while country pubs are often better placed to weather a cost of living crisis in which punters have cut back on eating and drinking out, they suffer from the same increases in costs including labour, beer taxes and food prices that are smashing their city cousins.
“From an industry perspective, hospitality is by far the highest risk industry and is doing the worst,” CreditorWatch chief executive Patrick Coghlan said.
“It’s got the highest risk of insolvency and we expect that to continue.”
The failure rate of small to medium-sized food and beverage businesses is the highest of any industry at 7.5 per cent, according to CreditorWatch data.
Hospitality and construction top the insolvencies data provided by the Australian Securities data with 1751 accommodation and food businesses entering administration for the first time out of 12,562 going concerns.
Voluntary liquidations instigated by creditors accounts for more half of businesses in the same segment being unable to trade out of a difficult operating environment.
Across the entire economy, business failure levels broke through pre-Covid levels in December and have steadily climbed since.
Eleven hotels in Victoria’s Bendigo region are for sale right now as long-serving publicans throw in the towel.
But Mr Coghlan said pubs in country areas were generally doing better than those in the cities because they enjoyed lower rents and a cheaper cost of living.
“So overall the margins are typically better than a city business,” he said.
“Despite that, when there’s a downturn there’s definitely less spend and if you’re running a country pub you’re definitely feeling that.”
See a full list of all the hospitality venues that have been affected below:
Australian Hotels Association CEO Stephen Ferguson said country pubs were also struggling to find staff amid a crackdown on skilled migration and it was also hard for workers to find somewhere affordable to live in seaside towns where AIRBNB is booming.
“Byron Bay is the example that everyone talks about,” he said.
“What we need is for governments to act.”
And he slammed the Commonwealth excise on beer, which he estimated costs a pub that goes through 15 kegs a week about $25,000 a year.
“It goes up every six months,” he said.
“It’s a hidden tax and it’s a tax on jobs.”
He said country pubs were a key part of small town life on par with the post office and GP.
“They’re places that people go to and congregate.
“Where else do the footy club go to after training?”
Paul Flynn, the owner of the Globe Hotel in Rylstone, a small town of about 750 people in the NSW central tablelands, said country pubs needed to serve the whole community.
“They’re essentially a community centre with some beer taps attached to it,” he said.
“In Sydney you can narrow down your offering to be quite niche, but here you have to do everything for everybody – and especially if you want local community support.
“You need to connect with local groups and ensure that they’re included in the pub in some way.
He said that in the three and a half years he has owned the pub it has weathered Covid lockdowns and flooding that cut the town off from the outside world.
“It seems to be picking up again now but obviously there’s cost pressures at the moment – everything seems to be heading north.
“Patronage is still good but obviously spend per head is down.
“I think over the next few months a lot more businesses will decide to call it quits, which is a shame.”
He said the Globe worked cooperatively with other businesses in the town to avoid stepping on each others’ toes.
“We’ll talk and collaborate rather than compete,” he said.
“You boost each other up.”
COUNTRY PUBS FOR SALE
Dargo Hotel
Dargo, Victoria (pop 105)
Running pub in Victoria’s high country.
Price: undisclosed
Cape Clear Hotel
Cape Clear, Victoria (pop 148)
Closed as a pub in 2017 but has a liquor licence.
Price: $880,000
Royal Hotel
Euabalong, NSW (pop 125)
On the banks of the Lachlan River.
Price: $390,000
Pit Pony Tavern
Collinsville, Queensland (pop 1496)
Running pub in the heart of coal country.
Price: $3m.
Koumala Hotel
Koumala, Queensland (pop 772)
Running pub south of Mackay.
Price: $1.1m
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Originally published as Australia’s hospitality industry in crisis: Top eateries hit by financial collapse
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