Fremantle: high turnover hides tough market in cafe, restaurant and catering sector

Turnover in the cafe, restaurant and catering sector has surpassed $25 billion over the past year, but profit margins remain paper thin.

Data from the Australian Bureau of Statistics this month showed a 2.2 per cent increase for the year ending March 2017.

Turnover generated from takeaway sales across Australia took that figure to more than $43 billion.

Restaurant and Catering Australia chief executive John Hart said the numbers showed cafes, restaurants and caterers were a “driving force behind the nation’s jobs and growth”.

But he said the increase had not led to a boom in overall profit.

“Even though turnover is increasing for cafes, restaurants and caterers, what this doesn’t take into account is the growing number of individual businesses who are each competing for a smaller share of the profits,” he said.

“With profit margins as slim as they are, businesses are coming under increasing pressure with the persistently high costs of wages, rent, produce and electricity all contributing to the tough operating environment they currently face.”

Coast Port Beach owner Ian Hutchinson said the increase in turnover did not represent the difficult climate in WA.

“On average here in WA, hospitality venues are down 30 per cent and we’re stuck in what is widely regarded among owners as the worst trading conditions in 20 years,” he said.

National Hotel owner Karl Bullers said the industry was in tough times.

“People aren’t spending, office vacancy rates are high and there’s been a mining boom exodus so people just aren’t spending their money in bars and restaurants,” he said.

Mr Hutchinson said that if profit margins were to improve, most of the responsibility lay with venues to create a space people wanted to visit and not simply a matter of calling on people to spend their money locally.

“It’s up to the venue to put forward an offering that people want. It’s about being able to fill a customer’s desire, but also create new desires which has been the case with a unique venue like Coast,” he said.

Mr Bullers said a point of difference was crucial.

“The onus is always on the business,” he said.

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