A few months ago, restaurant owners across the country were getting excited to see the re-commencement of interstate travel across Australia. Hospitality establishments assumed that more freedoms to travel would result in more dollars being spent by customers. Unfortunately, the surge of the Omicron covid-19 variant means that hospitality venues are now struggling even more so than what they were struggling when Australian states were stuck in lockdown.
Restaurant owners across Australia are saying that the combination of supply chain issues, staff shortages, hesitant customers and non-existent government support has left them in worse financial straits than ever before. Many restaurant owners are even suggesting that going into lockdown would make it easier for their businesses to remain profitable considering the current state of the pandemic.
Sydney restaurateur David Bitton said despite enduring two years of the pandemic, he has never seen a worse time than what he is seeing now with the omicron outbreak.
He owns three Sydney based restaurants which have been losing over $100,000 a week since December.
Although his businesses have been bleeding money for the past two years, it was manageable during the early days of the pandemic because everyone else was in the same position and the government was offering reasonable amounts of support.
However, the Omicron variant has changed everything.
“For the first time in 22 years I don’t know where we are going and what the future is going to look like. They are saying Omicron is going to wear off in two or three weeks but we have already been through three weeks of it. We are not Microsoft or Tesla, we are a small business so we don’t have the support of big corporations, so I’m not too sure what the future looks like,” says David Bitton.
December and the Christmas period was supposed to be one of the busiest times for the hospitality industry and Mr Bitton was gearing up for people to spend up big but the reality was scary and left him in financial disarray.
“There were cash flow rich people as they have been stuck at home and instead of spending $50 or $60 on a bottle of wine they are willing to spend $90 and instead of a two-course meal they would get a three-course meal and lots of people were spoiling themselves. I was excited and thought we were going to kill it and we had plenty of bookings and then Omicron started,” says David Bitton.
“Everyone was cancelling and we had dinner cancellations for 18 people and it’s $150 a head it’s big money and everyone was cancelling functions, all the big banks and corporations were cancelling their Christmas party and we had nobody eating with us. Then we opened in 2022 and no one is coming out and we are still paying full rent, full wages, full super and the money is still coming out,” continued Mr. Bitton.
Mr. Bitton reveals that he has been forced to shut down his restaurants in the evenings no longer offering a dinner service as staff shortages bite, with around a dozen employees infected with Covid or isolating as close contacts, while customers are also too afraid to come out.
“We are usually open for dinner four nights a week from Wednesday to Saturday in Rose Bay and Alexandria, but at night time I don’t have enough staff to operate and I have to cut my losses and minimise the damage until people are confident to spend money,” says Sydney restaurateur David Bitton.
Rise In Covid-19 Cases Triggers A Decrease In Early Year Spending
ANZ is reporting a huge decrease in early year spending across the country when compared to previous years. The caution in spending is a result of the significant spread of the Omicron variant of covid-19 especially in NSW where spending in the week to 2 January was 25 per cent lower year-on-year.
However, ANZ Research senior economist Adelaide Timbrell emphasises the recent drop is nowhere near lockdown levels.
“I don’t think it’s cause for too much concern for the 2022 outlook of spending yet. The Omicron caution is something that’s going to develop and change quickly. The good signs for spending in 2022 are that people are shifting their spending online rather than just not spending altogether, particularly for discretionary categories like non-food retailing and dining,” says ANZ Research senior economist Adelaide Timbrell.
“We’ve also seen that in the 2021 retail data that Victorians actually had a much smaller impact from Delta lockdowns compared to people in NSW and the ACT, and I think that speaks to the fact that when people – whether it’s businesses or consumers – have more experience with lockdowns, it tends to mean that they have a smaller spending impact each time,” continued Ms. Timbrell.
The author of ANZ’s spending data wrap-up adds Victoria’s spending was down 19 percent and Queensland’s was down 17 percent, although the rest of the country was not hit as badly.
“But if this caution does continue and we do see people stay at home more due to Omicron or not spend as much on hospitality and other retailing, that may be something that has an impact. It is just too early to tell right now. There’s a big difference between staying home for New Year’s and an economic crash, and I think we’ve just got to really remember that when we look at this data,” says Adelaide Timbrell.