Recent spate of restaurant closures in Sydney are likely to continue according to a new credit report

One in 13 hospitality businesses expected to fold in the next 12 months according to a new report.

Tequila Daisy in Barangaroo is one of many diners to cease trading in recent times.

A new report has revealed what those in the hospitality already know and that is the food and beverage industry is the most susceptible to the current economic conditions and decrease in customer spending compared to other industries.

New figures released from Business Risk Index for the month of April from CreditorWatch show the food and beverage sector is the worst performing industry in Australia, with one in 13 businesses facing failure in the next 12 months.

And of those businesses, it’s predicted that the small to medium businesses are the ones most likely to fail.

The report also shows that food and beverage services industry has the highest rate of external administrations by industry and the industry with the most Australian Taxation Office debts over $100,000.

The figures reflect the recent state of hospitality restaurant closures across Sydney.

Redfern’s Redbird has been a victim of the cost-of-living crisis.

In the past month a host of Sydney venues have stopped trading, most notably Barangaroo’s Tequila Daisy and Redfern’s Redbird, which was operated by husband and wife team Rebecca Lines and Hamish Ingham.

Ingham, who got his start in the industry working for Kylie Kwong, announced the closure siting current cost of living conditions “tougher” on hospitality than the Global Financial Crisis (GFC) and the Covid-19 pandemic.

That same week hospitality business Good Group Australia, which operated Martin Place’s Botswana Butchery, went into administration and terminated it’s 200 staff after owing more than $23 million.

They join a long list of closures including Potts Points Raja and Redfern’s The Sunshine Inn,

Bar owner Michael Dhinse, who runs voodoo-themed CBD bar Papa Gedes said business was the worst it’s been in the past five years.

“There has been a huge increase in operational costs like utilities and rent combined with customers not spending like they used to,” he said.

Sydney CBD bar owner Micky Dhinse with Papa Gedes famous sandwich, the Muffuleta. Picture: Richard Dobson

“Trade is inconsistent. One month we have a great month and then next it might be slower.”

Being an established bar that marked 10 years in business last year, Dhinse said hospitality has always been a tough industry but there is reason for hope.

“We’ve always had to pivot and manoeuvre. But there is light because people are still going out and wanting a good night out.”

In a statement, CreditorWatch CEO, Patrick Coghlan believed conditions will get worse for businesses in the hospitality sector before they get better.

“The outlook for hospitality businesses is not likely to improve until we see a lift in consumer spending,” he said. “And that is not going to happen until the impacts of one or two rate cuts filter through to households. We don’t anticipate that being felt until at least the second half of next year.”

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