Sydney restaurants, cafes threaten to cut staff amid massive downshift in customer spending

Once-bustling businesses in Sydney’s CBD are on the brink of collapse, with pictures revealing just how bad the problem has become.

Once-bustling businesses in Sydney’s CBD are on the brink of collapse, as retail and hospitality juggernauts threaten to cut staff en masse to stay afloat.

Exclusive survey data from Business Sydney have revealed 39 per cent of retailers, restaurants, and cafes in the CBD are forecasting major cuts to staffing numbers in the next three months, as 83 per cent report plummeting customer purchase numbers.

Businesses in the city’s heart sounding the alarm come as the latest ASIC insolvency data reveals 724 hospitality businesses closed in the past financial year across NSW, while 316 retail stores shut their doors in the same period.

Business Sydney executive director Paul Nicolaou said businesses across the heart of Sydney were yet to bounce back to pre-pandemic levels.

Mr Nicolaou said the NSW government needed to follow a 10-point plan to revive the struggling retail and hospitality industry.

The agency has called for the government to bring back restaurant and cafe vouchers, appoint a minister for Sydney, and encourage more businesses to open later with 9pm closing times.

“These are tough times for the CBD business community,” he said. “Business Sydney’s 10-point plan addresses the complexity of the problems facing CBD businesses.

“The current position demonstrates why the appointment of a designated minister for Sydney is vital to lead and co-ordinate efforts to revitalise the CBD.

“At the same time, we should not allow ourselves to be dragged into a vortex of economic gloom and doom, which could become self-perpetuating.”

The business boss said more public transport options were needed late at night and early in the morning, and that state and federal government agencies should force public servants back to the office.

But Mr Nicolaou said there was a group of “never-say-die businesses” bucking the trend in dire conditions.

Avenue on Chifley owner Philip Barbaro does not open on weekends because no one is around. Picture: Richard Dobson

Avenue Group boss Philip Barbaro runs six cafes and bars across the Sydney CBD, and has closed his venues on weekends as foot tracking numbers around the CBD plummet.

He said business owners who called the city home were facing a “perfect storm” as the price of produce and staff rose, customers had less to spend and major businesses allowed employees to continue to work from home.

“We are battling incredibly difficult conditions,” he told The Saturday Telegraph.

“Productivity and profitability is down because the city is a ghost town.

“We are good at pivoting the businesses to what the customer wants, it is the only way to survive.”

Thursday lunchtime at Avenue on Chifley.

Friday lunchtime at Avenue on Chifley.

The hospitality boss said his venues saw the most trade mid-week, but there was significant drops in foot traffic on Mondays and Fridays.

The ghost-town concerns for Sydney CBD come as Business Sydney estimates 110 city businesses closed last financial year.

Restaurateur and chef Luke Mangan said while customers across his Sydney venues may be “scrutinising their spending more, they are happy to pay for experiences”.

“Small businesses across Sydney and NSW are hurting, but as a business owner you have to adapt and be agile to get people in the door,” he said.

“Rather than going out two or three times a week, customers are choosing special locations and are on the lookout for good experiences at the table.”

Restaurateur and chef Luke Mangan said business owners had to adapt to changing customer needs. Picture: Tim Hunter

Mr Mangan said state and federal governments could support businesses doing it tough by giving concessions on GST and payroll taxes.

A NSW government spokesman said the CBD would see an injection of hundreds of thousands of people when the Sydney Metro City opened in August.

“We have slashed Friday public transport fares, with prices now matching discounted weekend fares, encouraging more people to work from the office before starting their weekend in the CBD,” he said.

“The government has extended operations on the Inner West light rail to 1am every night and added hundreds of extra services, making it easier for people to stay out longer.”

The spokesman for NSW Premier Chris Minns said the government had also doubled the number of NSW venues hosting live music performances, while we also lifting the cap on concerts at Moore Park.

But the government representative ruled out CBD hospitality vouchers.

“While our government is always looking at ways to make business easier, artificially pumping money into the economy when inflation is high risks longer-term pain via higher interest rates,” he said.

Just one out of every six NSW public sector employees works in an office, with “flexible working arrangements”, which allow public servants to work remotely, in effect since 2019.

The former Liberal government’s “Decade of Decentralisation” initiative saw CBD office space holdings reduced by more than 150,000sqm by October 2021.

According to 2021 figures, since the introduction of the decentralisation initiative, around 10,000 public service roles relocated from the Sydney CBD to Western Sydney and regional NSW.

The latest figures show around 96 per cent of leased floor space in Sydney’s CBD is not occupied by NSW government agencies.

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Originally published as Sydney restaurants, cafes threaten to cut staff amid massive downshift in customer spending