How can we navigate hospitality’s hurdles?

I'm a long-standing member of HostPlus, my professional life is devoted to service, and I'm a complete restaurant romantic – naturally, I have a few words to say regarding the challenges facing the hospitality industry (as do a lot of other people). 

Please indulge me while I regale you, alongside a roll call of Newcastle’s most-loved venue operators, why we should all be eating out on a Wednesday.

There is a beauty about restaurants, a lovely veil over reality. There is a great divide between the serenity of the experience versus the grind of getting the dish to the table.

For anyone who has binge watched The Bear recently: yes, it is really like that, and the anxiety is that palpable.

So, for diners who care about their local staying open a few more weeks, months, years, I’m going to lift the veil a little more. 

Getting the doors open for service costs a bit more than you might think. 

Just to be open often requires tens of thousands of dollars, which you hopefully make up for that week to cover the wages, licences, insurances, utilities, rent, tax, super, and the cost of goods. And in the post-Covid world we inhabit, every single element has increased for hospitality businesses, in eye-watering proportions. But due to the ongoing interest rate rises and household financial stress most people find themselves staying in, bookings and revenue are both down. 

The doom was rolling like a tumbleweed through Newcastle last week at the mention of further interest rate rises. The cost-of-living pressure is affecting. Bad news is raining, worsened by literal rain in an incredibly seasonal, weather-dependent city. And restaurants are closing every day. But that isn’t your fault. And it’s not necessarily a venue’s fault either. But it’s a fact, and unfortunately, there are more closures to come.

A positive for venues (ones that are managing to keep their doors open) is that this economic climate has forced them to tighten up their finances and be savvier about the back end of operations.

“Momo is a lot tighter than it used to be,” Linda from Momo Wholefood said.

Linda credits her wonderful customer loyalty for continuing to keep the doors open. Mara from Son of a Gun shares a similar perspective.

“It’s been a good challenge, we watch the numbers so closely. When sales improve, businesses that have survived will come out much stronger,” Mara said.

Aside from the obvious financial pressures plaguing consumers and operators alike, there are also less overt issues at play. One of the silent restaurant killers is tax debt, and while I’m not going to spruik tax reform from my bread box, it is worth mentioning that there are no effectual incentives or kickbacks for the hospitality industry. 

There is no GST on produce – rather, it's collected in a sale. And, with next to nothing claimable, it results in huge bills come tax time, and that's before the PAYG for wages, which are always high in a labour intensive industry. A few busy months of accumulating taxable income followed by several quiet months of not being able to pay for it, results in a steamroll effect that can be hard to escape from. 

For that reason, restaurants big and small are feeling the pinch, and there is a preconception that venues that are busy are therefore successful. These two things are not always one and the same, and many “busy” venues are barely keeping afloat. A full restaurant on a Saturday night does not mean a full restaurant every day of the week. 

Two or three sittings on a Saturday night does not mean a profit. If the venue is operating at half capacity on a Wednesday and Thursday, that needs to be made up for on the weekend to cover the loss. If couples share a meal instead of ordering one each, that is 50% of revenue down for those seats, and in a restaurant, a seat is valuable real estate. 

At one of Newcastle’s most loved cafes, staff described a disheartening interaction where a customer asked for free hot water for their BYO tea bag. 

“We trade in tea and coffee; you wouldn’t bring your own beer to a pub,” said a local business owner who asked to remain anonymous.

Small as it might seem, a tea is a cafe’s bread and butter, and the pot of water is a substantial part of the cost associated with the tea itself. 

Cost of goods aside, there’s the water, the electricity to boil it, the staff to pour it, the vessel it is served in, the Workcover in case the water spills.

We all want to maintain our cafe lifestyles now, hard as the cost-of-living crisis is, but our favourite spots will fail to stick around without patronage.

Hospitality is an industry that fewer and fewer people seek out as a career, much to the dismay of those of us who live and breathe it. It attracts all manner of people, so those that do succumb to the charm are incredibly passionate about what they deliver. One of those people is Stephanie from HUMBUG, who describes the positives of being an owner operator in the industry right now.  

“It gives me what I need to feel proud and satisfied. We are fortunate to have a customer base that supports us and have the space to raise our kids in a notoriously un-family friendly industry. We can get the bills paid. But there are a lot of businesses suffering that can’t,” Stephanie said.

When hatted restaurants are surviving, not thriving, and businesses are closing with a few days’ notice, what can we do about it? Well, I have some ideas. 

Let’s keep consumer standards high – no-shows and last-minute cancellations are not just inconvenient; the loss is calculable and painful.  

Secondly, don’t let Dry July stop you from supporting local businesses this month. If you are partaking, consider one of the many venues with a fantastic non-alcoholic range. There is also a lot to be said about a Damp July – drink less, but drink better. 

Doing neither? Consider what your plans are for next Wednesday: Hump Day Champagne, trivia with friends, takeaway from your local Thai restaurant instead of agonising over a recipe? People are still having birthdays and weddings; consider gifting an experience, like tickets to a show or a restaurant voucher.  

And finally, if you have a great experience at a venue, leave a Google review and tell everyone you know. This positive press is free but oh so valuable – your good word goes a long, long way.