Food News

What now for Australia’s restaurant industry?

The hospitality industry is in crisis, with many predicting up to a third of all restaurants will close permanently following the COVID-19 pandemic. Some of the industry’s leading figures speak about the future and what needs to change.
Graphic: Laura Jacobs. Photos: Lean Timms and Colin Page

It’s been nearly six months since Attica’s tables were last set. While other Melbourne restaurants reopened during Victoria’s brief lockdown reprieve in June, the Ripponlea dining room has been empty since March.

“Attica only works as a viable financial business with 60 patrons,” explains chef and owner Ben Shewry. “A marginal one, but still viable. We can’t open with 20 patrons, or even 40.”

But while the tables have been cleared, the kitchen has been far from dormant. Only days after the forced closure, Shewry and his team evolved operations quickly, wielding buzzsaws and whisks, converting tables into shelves and launching the Attica Bake Shop (offering, among other delights, a giant version of the restaurant’s signature Vegemite scroll). Attica At Home, too, sprang to life overnight, dispatching both refined classics and more comforting, homely fare, such as lasagne and garlic bread, delivered by Attica staff, including Shewry himself.

“It’s been absolute chaos,” says the chef, who sets to work each day under the spray-painted mantra ‘never give up’, scrawled across Attica’s kitchen wall. It’s a mantra adopted by many in the industry, which has been forced to repeatedly reinvent itself in order to survive. A more brutal alternative would be: Adapt or die.

“Everyone’s working toward the same goal,” says Shewry. “I have a renewed sense of confidence that comes from being certain that I’d go broke, but then thinking, ‘You know what? Not without a fight!'”

Shane Delia has stared down the barrel of the same gun. He opened his latest venture Maha Bar just weeks before COVID restrictions forced its closure. As restaurants began to reopen in June, Delia issued a bleak warning.

“Everyone was jumping up and down getting excited that we’re going to get back into our restaurants, but getting into what? What are we actually getting into? It was pretty broken before, so why is everyone rushing back to what we had?”

Delia believes the industry has been operating on a knife’s edge for many years, too often buoyed by respectable weeks of trade and overlooking deep, systemic issues that have long been at hospitality’s core.

“As long as there are restrictions,” says Delia, “there is no survival post-COVID. If you’ve got a dining room that’s only legally allowed to operate at 20 per cent capacity and you’ve still got the same outgoings – the same rent, the same mortgage repayments, the same wage structure – there is no silver lining. I don’t understand how restaurants can be so positive that they’ll get back to ‘normal’.”

Rather than simply flag problems, Delia is helping to find solutions, launching the home delivery service Providoor, which allows customers to experience restaurant-quality meals at home from some of Melbourne’s best chefs. The meals are partially cooked and prepared by chefs and refrigerated ahead of delivery, leaving customers to complete the process at home.

“People will keep eating at restaurants even if we offer them the opportunity to eat the food at home,” says Delia. “This gives restaurants the opportunity to diversify and expand their market. You don’t need to invest anything, and you get the opportunity to connect with a market that’s far bigger than anything you can squeeze into your dining room.”

Shane Delia preparing food at his restaurant Maha in Melbourne.

It’s these diversifications that Sali Sasi, co-owner of Adelaide’s popular Leigh Street Wine Room, says are essential to the future success of not only larger restaurants, but smaller venues like hers as well. “Some kind of element, whether it’s keeping the takeaway food or offering pantry items, I think it’s a smart business model.”

For her and husband Nathan, that element is Juice Traders – a wine delivery service capitalising on the venue’s expertly curated natural wine selection. “Juice Traders is carrying us through,” says Sasi. “Without it, our business wouldn’t make enough money to be sustainable as long as the restrictions remain in place.”

The initiative not only improves the restaurant’s bottom line, she explains, but provides additional support for the many small wine producers Leigh Street Wine Room highlights on their list.

(Shortly after this story was published, Leigh Street Wine Room was banned from seating patrons at their bar, effectively shrinking their dining room capacity from 29 to just 12 patrons.)

In Sydney, Nomad’s Jacqui Challinor says small suppliers are a crucial wheel in the industry and fears that without significant financial reform, restaurants are risking their own future. “Some suppliers are still owed hundreds of thousands of dollars by venues,” she says. “It’s all a chain. If the farmers go bust because we don’t pay them, then we don’t get the beautiful produce anymore.”

Neil Perry, speaking just days before he announced his retirement, is cautiously optimistic about the industry’s future. But he says relationships with landlords require a major overhaul, with many remaining inflexible and refusing to offer assistance while restaurateurs suffer. “There are a lot of pig-headed landlords,” he says. “Our margins have gotten incredibly skinny while theirs have gotten fatter and fatter. A lot are great, but some have been absolutely horrific to deal with.”

Delia agrees and is calling on the government to step in with urgent reforms to support the struggling industry, including tax reform and legal support when it comes to dealing with landlords. “We will find a way – hospitality is built around resilience – but we can’t do it with any sustainability if there’s no changes made to legislation.”

And while many who work in hospitality have broadly praised the JobKeeper payment scheme (while also decrying the abandonment of international employees engaged under working visas), there are broad fears for the industry when it comes to an end, with Perry believing that up to a third of all restaurants will either not reopen or fail when JobKeeper ends.

Among other imminent threats to the future of the industry, are the deferred rent payments and similar “quick fixes” businesses agreed to during the shutdown, says Sasi. Agreeing to hold off payments creates a temporary cashflow boost, she explains, but the pain begins when the renegotiated due date arrives. “Unless you’re absolutely skyrocketing your prices, your business model won’t work when those debts kick in.”

Nomad executive chef Jacqui Challinor.

Nomad executive chef Jacqui Challinor.

(Photo: Petrina Tinslay)

Navigating these challenges, the chefs agree, will require an unprecedented level of cooperation from customers, supporting restaurants as they make changes to secure their survival.

Only hours after restaurants were given the green light to reopen in June, reports of no-shows, late arrivals and other long-standing frustration hit social media, leading many to quickly implement strict policies on deposits and pre-payments.

“I’d like to see taking credit card details with reservations become the norm,” says Challinor. “The damage that we see from no-shows is huge, and it’s so disrespectful.” She believes customers often take restaurants for granted, as they don’t understand the slim profit margins and restrictive business conditions most operators trade under.

Dash Rumble, co-owner of Canberra’s Pilot, believes guests need to be more diligent in reading a venue’s terms and conditions when making a booking. “The amount of times someone is shocked by a two-hour booking window, or arrives with unannounced dietary requirements is a bit frustrating,” she says. “But that’s an easy fix.” Like Challinor, she proposes stricter measures around pre-payments and, additionally, minimum spends. “Most operators just want to be able to continue to serve people as long as they can, and that might be the best way to do that.”

At Leigh Street Wine Room, Sali and Nathan Sasi have countered these challenges by introducing a system that requires customers to purchase a fixed price $100 ticket for Friday and Saturday night bookings. The money is put towards the bill and, in the event of a no-show or an unprofitable spend-per-head, the balance is retained by the restaurant.

Sasi says the response to date has been supportive but believes initiatives like hers would benefit from an industry-wide approach. “If we’re all putting in measures with some sort of penalty that customers receive when there’s a no-show, then that message is much stronger.”

The widespread introduction of set menus among venues that have previously offered à la carte is another strategy helping small eateries manage minimum spends, while also tightening labour costs and minimising food wastage.

“We cut unnecessary costs by being able to plan ahead for everything,” says Rumble, having introduced a set menu on Pilot’s reopening. “Maybe we’re still in a honeymoon period, but we are already seeing new customers turn into repeat guests, so hopefully that’s a good sign.”

The empty dining room at Pilot, Canberra.

(Photo: Lean Timms)

Brett Pritchard, co-owner of Ron’s Upstairs in the Sydney suburb of Redfern agrees that the reduced food and labour costs resulting from set menus will remain important for mid-size venues like his, as long as restrictions remain. But he sees it as a short-term proposition. “I’m a neighbourhood restaurant and people sometimes just want to drop in for a few plates and glass of wine. I have customers that wouldn’t return if we only ran a set menu and I would hate if I didn’t see them again.”

But Pritchard understands better than many that these measures are not universal solutions. Across the road from Ron’s, Redfern Continental – another of his venues – will not reopen, after the shutdown exacerbated pre-existing issues. “Prior to COVID the industry had already suffered a small downturn. The place looked busy, but it was inconsistent and labour costs were huge,” he says.

It’s an outcome many predict will soon be echoed throughout

the country. But amidst the darkness and uncertainty of a beleaguered, transitioning industry, there is also a renewed sense of community.

Among Ben Shewry’s many new undertakings is Attica Soup Project – created with food writer Dani Valent – which provides meals to overseas hospitality workers stranded in Australia without governmental support. “It’s not good enough to just take from society,” says Shewry. “You need to contribute as well.”

In Sydney and Melbourne, Neil Perry has mobilised his kitchens to produce thousands of meals a week for distribution to hospitality workers and partnered with OzHarvest to help feed women and children in crisis centres. Dubbed ‘Hope Delivery’, it’s the kind of outreach Perry believes is incumbent on any restaurant to provide in this new world.

“A restaurant belongs to the community, and part of being in a community is taking care of people who are less privileged. There’s a lot of need for that right now. Sadly that need will probably go on forever because we seem to be able to, in this incredibly lucky country, leave a lot of people behind.”

Shewry agrees it’s a mantle all restaurateurs should be looking to assume. “It doesn’t take much. There’s lots of small ways that businesses can impact communities positively, and I think businesses should be looking for those ways.”

While the industry looks set to endure many more months of uncertainty, restrictions and limited tourism income, Attica’s frontman remains hopeful.

“I feel a sense of freedom and opportunity,” he says. “When everyone’s fighting to survive, and then you survive, it’s very empowering. We’ve learned a lot from Covid, and we can’t wait to bring that spirit into the dining room when we reopen. It’s going to be an exciting time.”

This story was originally published online on 1 September, 2020. It was updated on 4 September, 2020 to include additional information about Leigh Street Wine Room and the enforcement of COVID-19 restrictions that ban them from seating patrons at their bar.

Related stories