Zeller has launched a national hospitality campaign and grant programme for new venue operators. Research from the payments company found that only 12% of hospitality operators think now is a good time to open a venue in Australia.
The campaign, No Reservations, features hospitality founders sharing lessons on running venues as operators contend with weaker spending per diner and rising costs. Zeller will also offer two grants of AUD $5,000 to up-and-coming operators.
Its transaction data suggests Australians are still dining out, but spending less when they do. Across the sector, venues are serving 9% more diners than a year ago, while spend per transaction is down 13%.
The pattern is most pronounced in pubs and bars, where average spend per diner fell 24% year on year even as customer numbers rose 22%. Cafés and coffee shops showed a similar shift, with average spend per diner down 15% and diner numbers up 25%.
Restaurants were comparatively stable. Average spend per diner fell 1.8%, while the average number of diners served declined 8%.
Margin pressure
A survey of 1,131 Australian hospitality operators and decision-makers pointed to broad strain across venue finances. Three in four said financial pressure on the sector was high or extremely severe, while 42% said they would not recommend opening a new hospitality business because the risk was too high.
More than two-thirds said profit margins were down from 12 months earlier. The survey also found that 56% reported lower revenue, 55% said average spend per seating had decreased, and 54% said foot traffic had declined.
Operators reported cost increases across most parts of the business. Food and ingredients topped the list at 94%, followed by delivery and freight at 90%, energy and utilities at 87%, insurance at 75%, and rent or property costs at 68%.
Labour remains another pressure point. More than half of respondents, 53%, ranked staffing shortages as significant or critical, and 62% said it was harder to hire staff than a year ago.
Many owners said they were absorbing the impact themselves. Nearly three-quarters said they were working longer hours to reduce wage costs, 47% had cut rostered hours for paid staff, and 40% had raised prices for diners.
Josh McNicol, Director of Growth at Zeller, linked the figures to a widening gap between busy venues and weaker economics.
"Australia proudly operates one of the world's leading hospitality sectors, but the business behind running a successful venue has become much harder to sustain. Our data shows venues are serving more diners, but earning less per transaction, while operators are absorbing higher costs across almost every part of the business," McNicol said.
"That creates a difficult equation for established venues, and an even more challenging one for the next generation of operators trying to get started. The next generation of hospitality operators is not short on creativity, ambition or ideas, but that needs to be balanced with a strong business strategy, tools that give them greater financial visibility, and practical guidance from people who have already built venues that last," he added.
Barriers to entry
The findings also point to growing pessimism about new openings. Beyond the 12% who said now was a good time to start a venue, 38% said new operators should launch only if they had strong capital and industry experience.
Respondents identified high operating expenses such as wages and utilities as the biggest barrier for the next generation, cited by 50%. Difficulty sourcing capital or credit followed at 49%, then attracting and training talent at 47%.
Industry competition and the challenge of finding a clear niche were each named by 38% of operators. Another 34% pointed to the difficulty of developing a business plan that leads to profitability.
The survey also suggested a skills gap. Operators ranked business operations and management as the most important skill for new entrants at 32%, ahead of financial management at 28%, marketing and brand building at 14%, and recruitment or team building at 12%.
No Reservations includes contributors from Renascence Group, Rosa's Canteen, Stomping Ground, Radio Mexico, Homer and Gerald's Bar. The series examines issues including seasonal menu planning, hiring, venue design, branding, service, and profit.
Alejandro Saravia of Renascence Group said newer operators needed a stronger grasp of the commercial side of the trade.
"Hospitality has always attracted people with passion, but passion alone is not enough to keep the doors open. The next generation needs to understand the numbers behind the dream, how to manage costs, forecast demand, build a team and make decisions before pressure turns into crisis," Saravia said.
"The operators who last are the ones who can protect the guest experience while staying close to the business fundamentals. That is not always the glamorous part of hospitality, but it is the part that gives creativity a future."