Tough times for hospitality businesses in Geelong could get worse amid multiple closures
Hospitality businesses in the Geelong region are facing “truly dire” economic conditions amid a flurry of recent closures – and things could get even worse.
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Hospital businesses in the Geelong region are facing “truly dire” economic conditions amid a flurry of recent closures.
A significant drop-off in consumer spending stemming from a cost of living crunch has been cited as the key factor, with the latest victim being Valhalla which went into administration on Wednesday.
The craft brewer’s woes are not isolated and, alarmingly, there appears to be little good news on the horizon, particularly for smaller operators.
The latest report from CreditorWatch, released Wednesday, makes for grim reading.
It forecasts that almost one-in-10 hospitality businesses are expected to fail in the coming 12 months.
The report stated that the industry has a comparatively high failure rate because of its reliance on discretionary spending, which has dropped as consumers divert money to essential items.
CreditorWatch chief executive Patrick Coghlan said the “truly dire” conditions for hospitality businesses would become even tougher if the Reserve Bank once again hiked interest rates.
“The combination of declining order values and increasing payment defaults is a major concern as it indicates more businesses are experiencing both cost and demand pressures,” he said.
“It is small businesses that are hurting the most as they are more vulnerable to adverse economic conditions than larger businesses.
“They operate on tighter margins and are less able to take measures to cut costs.”
The report comes almost two months after well-known Geelong hospitality owners Gorge Camorra and Andy Pobjpoy said current conditions were worse than during the Covid pandemic.
“It’s horrible, the worst it has been in the 20 years that I’ve owned venues,” Mr Camorra said at the time.
“It’s scary, I’m very worried, I don’t want to close venues.”
Geelong Chamber of Commerce chief executive Jeremy Crawford said the colder months are proving particularly tough for the hospitality industry.
“A lot of our members and a lot of the businesses that we support, or are in contact with, have had some really tough times in the last three months,” he said.
“What we’re finding is that there’s a bit of a perfect storm where we have some quite unfavourable business conditions in the state.
“The rising costs of doing business and the service costs that have risen recently is just being compounded by some much lower discretionary spend from the local economy and also from the visitors.”
Mr Crawford said much work was to be done to improve the hospitality industry in Geelong, but he remained confident there would be a resurgence.
“There are some challenges that we as a region really need to get through,” he said.
“But that’s going to take a collective effort to ensure that we can have some success all year round.”
Hospitality businesses that have closed in Greater Geelong over the past 12 months
While not all the below business have been forced to shut due to economic reasons, it’s undeniable that the industry is facing significant issues.
Napona
The popular Ocean Grove restaurant cited economic forecasts, but also the desire to explore different opportunities as reasons for its closing.
“We cannot express enough gratitude for the relationships we’ve built over the years with customers, our suppliers, and also all our awesome staff,” Napona owner Will Swinton said.
“We’ve watched families grow, staff grow from kids to adults, made friends and had some truly great times.”
The Mediterranean-style restaurant on Hodgson St served a variety of pizzas and seafood dishes.
La Cachette
The up-market French waterfront restaurant announced it was closing because “the time was right”.
Owner Matt Podbury said there were “no negatives” in the decision.
“We’re just ready,” he said.
“We’re at a stage where we can leave gracefully and look for new stuff, there’s opportunities all the time and there’s always new stuff on the horizon.”
Previously plying his trade at popular Anglesea restaurant Captain Moonlite, Mr Podbury and his partner Joanna Karlin opened La Cachette in June 2021.
Pistol Pete’s
Owners Pete Raimondo and wife Kerri said the “sad” decision followed an ongoing “struggle to maintain the businesses’ viability”.
“After an amazing 10 years of bringing the tastes and sounds of the south to Geelong and beyond, it’s time to make the hardest call of all,” the couple said.
“We have tried our best to work through the many challenges that have landed on our doorstep, with a positive attitude and a smile on our faces.”
The Little Malop St venue specialised in Southern American, Louisiana and blues music and food.
Sou’West Brewery
The Torquay business appointed KordaMentha as administrators in May, with the firm confirming it had no alternative but to cease operations and terminate all staff immediately.
Gregory Ellery and Broderick Arnhold were listed as the company’s directors on Australian Securities and Investments Commission documents.
The large area, capable of holding 400 people, incurred significant overheads and it is understood attempts by the owners to have their rent reduced were unsuccessful.
It has since emerged that Great Ocean Road Brewing will take over the site in September.
We Are The Press
Allan Heyne and Paige Gailius transformed their successful toastie food truck business into a bricks and mortar outlet late last year.
In May, they announced they would close, citing a number of factors forcing them to cut short their lease.
Mr Heyne said the hard decision was a “combination of everything”, including interest rate rises and cost-of-living pressures, as well as untenable power and gas prices.
“We will figure something else out and throw ourselves in the deep end,” he said.
He said they were not alone in facing these struggles, claiming his friends and colleagues had been forced to close hospitality venues in recent times.
TonTon
Owner Aaron Sheedy said a number of personal matters led to him close the business after less than two years at the Barrabool Rd site.
“Although it is quite a difficult financial climate to survive in, we were doing quite well,” he said.
“There’s just a new chapter of my life I am going down and sadly I have to say goodbye to this.”
Mr Sheedy said getting to know the community over the past 18 months was a highlight.
“Building those relationships with them (customers) is something you can’t replace, I’ll cherish those forever,” he said.
Little Mussel Cafe
The Portarlington seafood restaurant announced via social media it would be close.
“It has been a lovely adventure and we are all going to miss your smiling faces,” it said.
“This week will be the last week you can enjoy our wonderful food while admiring the best views in town and being looked after by fantastic friendly staff.”
Gloria Jeans
The coffee chain announced it would close its Market Square outlet in March.
Franchisee Mohamed Labe said high rents and low foot traffic made it impossible to stay.
“It’s really sad. I come here every day and spend my time, and over the last 12 months, I’ve been spending my own money,” Mr Labe said.
Mr Labe, who ran the franchise for three years, attempted to leave his lease early due to losses but was unable to, which forced him to keep the business open and losing more than $4000 a month in the process.
He also said that he had lobbied both Market Square and Gloria Jeans for a rent reduction, but was unsuccessful.
Kermonds
The popular burger shop in central Geelong closed after the death of co-owner Tim Tanner.
“This decision has been one of the hardest in Kermond’s 75 year history and we are absolutely devastated that we find ourselves in this position,” Mr Tanner’s business partner and friend Brett Healy said.
Kermond’s opened its Geelong store in 2018 after its owners noticed customers were travelling hours to Warrnambool to get a taste of their famous burgers
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