Prospect Road business Cafe Komodo to shut in June as Adelaide hospitality crisis set to reach new winter low
A popular inner-city cafe that has been an Adelaide institution for two decades will close its doors as industry leaders warn the state’s hospitality crisis is about to get worse.
SA News
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The state’s hospitality crisis will only get worse as industry leaders warn the public to brace for more closures during the traditionally tough winter months.
As Adelaide venues continue to shut their doors and others fight to stay open, hospitality groups say the sector is facing its toughest test since the pandemic, with burnout owner-operators leaving the industry in droves.
They say the current economic climate has been a “fatal blow” for smaller to medium business owners still recovering from the impact of Covid-19 and the upcoming winter season could be the death knell for even more venues.
Cafe Komodo owner Andrew Taylor is planning to close his Prospect Road business – a staple of the area for 19 years – by the end of the financial year.
After six years running the beloved community cafe with wife Bronwyn, Mr Taylor, 50, said hospitality is on a “downward spiral” with no end in sight.
“That’s why I want to get out. I’m not making any money, I’m losing money,” he said of the venue, which also regularly hosts live music.
“In six years I haven’t paid myself one dollar, and I’ve worked my arse off because I love the business.
“The community cafe is fantastic, and it’s survived a lot of things over the years but I should have closed 12 months ago. Now the time has come.”
Mr Taylor said he’s applying for jobs in the defence sector, where he initially started his career, as he bemoaned the lack of support for hospitality operators.
“For me it’s a no-brainer. So many people are looking to get out of the industry. There’s so many things against doing business – hospitality and small business – in SA,” he said.
“We’re going to become a defence state, which is what the government wants... but we need restaurants, cafes and bars. We need that infrastructure.
“Without it, it becomes a pretty boring place to live.”
Hospitality leader and business owner Simone Douglas this week closed her gluten-free city cafe, the dob on King William, a sister venue to the historic Duke of Brunswick Hotel on Gilbert Street.
Rising operational costs and increased cost-of-living pressures, coupled with “additional burdens” such as payroll tax, will make it impossible for many to stay open as winter looms, Ms Douglas said.
“Small operators are staring down the barrel of a fully loaded gun coming into a season where they often use money banked in summer to survive the winter downturns,” she said.
“These family businesses don’t have the deep pockets of the big players or the bargaining power.
“You are already seeing an increase in people making the early calls (to close). They are the smart ones... many will take the gamble but only a few will see that gamble pay off.”
Australian Hotels Association SA chief executive Anna Moeller said it was inevitable that there will be more closures in coming months, as smaller operators battle the effects of “long Covid for business”.
“A number of them limped out of Covid, they fell headlong into a cost of living crisis and that’s been a fatal blow for a lot of them,” she said.
“It’s a pattern that we see every year: the winter months are harder but at the moment, it’s particularly dangerous given the current economic climate.”
The South Australian Business Chamber this week released its latest business survey results which showed a decline in trading conditions over the past quarter. Its chief executive Andrew Kay said the hospitality sector has been “hit harder than most” and a below-par winter season will spell trouble for venues.
“With costs continuing to rise while revenue falls, the unfortunate reality is there will be more casualties before the economy picks up again,” he said.
Mr Kay said many owner-operators have never really recovered from the pandemic and have “just been hanging on”.
“The continual increase in costs and erosion of profits is not sustainable and we are seeing the impact of that now,” he said.
The state’s hospitality crisis has also taken a “significant” toll on the mental health of owners, according to industry leaders.
Ms Douglas said operators are often working between 60-80 hours a week for little return, running their venues during the day before heading home to try and “balance the books”.
“The burn out factor is high. They are watching themselves drown and despite trying everything to ramp the business up, they are faced with a public that is predominantly now hunting cheap eats, eating out less and complaining more,” she said.
Ms Moeller said the AHA runs several mental health programs for their members which are always booked out.
“People are looking for this assistance. It’s a pretty good indication that people are literally crying out for help,” she said.
“It’s an increasing problem, and one that we’re seeing more generally in the community.”
Mr Taylor describes his own mental health as “terrible”.
“I work on the business and stress about it more than ever,” he said. “Mental health support is what we need. That’s a big thing and what the industry needs.”
Cafe Komodo has been on the market since November and Mr Taylor is still hopeful of finding a buyer.
Whatever happens, he knows walking away from the business is the right decision.
“There’s definitely sadness but there’s also some relief. Those sleepless nights can go away,” he said.
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Originally published as Prospect Road business Cafe Komodo to shut in June as Adelaide hospitality crisis set to reach new winter low
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