NSW restaurants and cafes crippling under ‘cost of doing business’

Restaurants and cafes are closing their doors at record levels across NSW – with the number of businesses falling into liquidation increasing by 222 per cent in the last decade.

Restaurants and cafes are closing their doors at record levels across NSW – with the number of businesses falling into liquidation increasing by 222 per cent in the past decade, as the “cost of doing business” cripples the hospitality industry.

New statistics from the Australian Securities and Investments Commission have revealed a total of 814 restaurants, cafes and other food services businesses across the state entered into external administration in the last financial year, up from 252 insolvency notices in the 2014-15 financial year.

The shock collapse of the hospitality industry comes as the operators of a beloved Paddington restaurant, which once thrived on nightly bookings, went viral after taking aim at politicians “turning a blind eye” to the city’s small business crisis.

Zafferano Trattoria Mediterranea, run by chef Simone Crivello and his partner Isobel Galloway, will shut down after four years in business, not because of poor food or bad service, but because, they say, Sydney has become a city where hospitality dreams can no longer survive.

Isobel Galloway-Crivello and her husband Simone Crivello at their restaurant, Zafferano in Paddington. Picture: Tim Hunter.

Ms Galloway told The Daily Telegraph the breaking point came last Thursday, when just three people showed up for dinner.

“I thought the booking system was broken,” she said. “Simone said, ‘No, it’s like a ghost town’.”

Ms Galloway said she and Mr Crivello had spent months wrestling with the decision to close, but the toll of rising costs, dwindling foot traffic, and political inaction left them with no other choice.

Their announcement video has now been viewed more than a million times, prompting an outpouring of support and heartbreak from small business owners around the country.

The couple will serve their final meals on August 24, before relocating to Sicily to start a new chapter.

“Sydney is my home. I grew up here. But life now looks better for us in another country,” she said.

“We’re lucky we have a new path. But others don’t. Their livelihoods rely on their restaurants surviving. And if they don’t — it’s sleepless nights, unpaid bills, and fear.”

The restauranters said Australia’s visa system was robbing small venues of passionate staff, while also calling for urgent tax reform and better support for independent venues.

“This isn’t just a goodbye. It’s a wake-up call”.

Daniel Hunter, CEO of Business NSW. Picture: NewsWire / Jeremy Piper

Business NSW boss Daniel Hunter told The Daily Telegraph he feared the state would “continue to see more and more businesses close down unless there is a serious look at the cost of doing business”.

“It is no surprise that cafes and restaurants are going out of business in record numbers – the cost of doing business is as high as it has ever been,” he said. “The price of insurance, workers’ compensation, energy, tax and compliance are at unprecedented levels.”

A Business NSW survey in the “labour-intensive” hospitality industry reported an ongoing skills shortage, as “three in four NSW employers ... reported difficulty recruiting or being unable to find suitable staff”.

One-third of businesses told the industry advocates they faced an increase of at least 30 per cent in their general insurance costs over the past year.

“Payroll tax continues to take more than $12.3 billion every year from about 52,000 NSW businesses,” Mr Hunter told The Telegraph.

“These changes would provide immediate relief to businesses, stimulate regional job creation, and help modernise the state’s economic framework.”

Night-Time Economy Minister John Graham said while the number of businesses closing was sad, it was “not surprising”.

“Behind every business closure is a tough human story, a broken dream or a financial nightmare,” he told The Daily Telegraph. “I see two key factors – too much red tape and tough economic conditions post-COVID.

Brian McGettigan, owner of Bondi Hardware. Picture: Justin Lloyd

“We hope that after a few more rate cuts, consumers will have more money in their pockets and businesses will recover faster with less rules holding them back.”

The call for tax cuts and more support for small businesses comes as The Daily Telegraph can reveal a beloved eastern suburbs eatery shut its doors in January, allegedly owing nearly half a million dollars in unpaid taxes.

Bondi Hardware bosses cited Covid, cost-of-living pressures, and spikes in costs of alcohol, food, utilities and rent as reasons behind their closure.

However, liquidators told this masthead the business closed with debts totalling $472,478 to the Australian Taxation Office.

Originally published as NSW restaurants and cafes crippling under ‘cost of doing business’