‘Not going out as much’: ‘Date-night economics’ leading to small business insolvencies

A change in Aussie dating habits could be having a catastrophic impact on small businesses, an expert has said.

A decline in Aussies going out on “date night” could be contributing to small business closures, an expert has said, as spiralling costs across the board continue to impact every facet of life.

As consumers reduce their discretionary spending, insolvency and business turnaround specialist Jirsch Sutherland’s national managing partner, Bradd Morelli, said he’d noticed an uptick in businesses being plagued by “cashflow issues”.

“I believe that we are only starting to see the tip of the iceberg in respect to insolvencies that are the result of declining sales and cashflow due to consumers reducing their spending,” Mr Morelli told news.com.au.

“We are still in the very early days, and even if interest rates are cut at some time in the future, it will get worse before it gets better.”

Australians “tightening up” on things like going out for dinner or paying for streaming services is “concerning” for the nation’s economy, Mr Morelli added.

“This naturally flows into businesses that would have otherwise seen those sales,” he said.

“People on fixed salaries with mortgages and rents to pay will always prioritise these over discretionary spends … Managing higher interest rates and rents is at the cost of discretionary spending.”

It also may result, he said, “in what would otherwise be good businesses experiencing challenging times”.

‘Date-night economics’ are ‘having a real domino effect’ on small businesses’ cash flow. Picture: Christian Ansley

In the past two years, Australians have recorded the largest fall in disposable incomes across the 38 countries in the Organisation for Economic Co-operation and Development (OECD), as higher mortgages, food and utility prices and rents put the pressure on household budgets.

Given Aussie singles spent an estimated $43 billion in 2022 on dating, it’s unsurprising that expectations around going out for dinner and drinks are now a “massive pressure” for young people, Australian Association of Psychologists INC president, Sahra Behardian O’Doherty, told the ABC in May.

“A lot of people that I speak to feel as though they can’t participate in dating as much as they would like to because they simply can’t afford it,” Ms O’Doherty said.

‘A lot of people … feel as though they can’t participate in dating as much as they would like to because they simply can’t afford it.’

Data in 2022 revealed Australian singles were spending $43 billion a year on dating, a fourfold increase since 2017.

At the same time, sales volumes at cafes, restaurants and takeaway food services have fallen for five straight quarters.

According to the Australian Securities & Investments Commission (ASIC), cafes, restaurants and small businesses registered disproportionate growth in insolvency appointments in the 12 months to June 30 this year.

The number of food services collapses skyrocketed by 50 per cent to a record 1667, compared to a previous high of 1114 in the 2023 financial year.

Restaurant and Catering Australia CEO Suresh Manickman said it was one of the toughest periods the sector has ever faced.

“Higher interest rates, cost of living pressures on the up, more expensive produce and the cost of energy are all having an impact,” Mr Manickman told The Australian.

“Compared to this time last year, people have less money in their pockets and a reduced ability to pay and go out, and there lies the problem the sector is facing.”

Originally published as ‘Not going out as much’: ‘Date-night economics’ leading to small business insolvencies