Sydney’s dining scene is under significant pressure due to rising fixed costs and restaurant oversupply, say hospitality operators, who are looking at new ways to adapt to a changing market.
“The hospitality industry is always challenging, but this year we have experienced the knock-on effect of the drought with rising food costs,” said Justine Baker, chief executive of hospitality group Solotel which counts Aria, Barangaroo House and Opera Bar in its portfolio.
“We have seen increases across the price of proteins, dairy and fruit and veg, with lamb up as much as 30 per cent and other proteins up to 18 per cent. The casualised workforce has impacted us too, with rising staff wages front and back of house taking their toll.”
An oversupply of eateries, a stagnant economy and distributive food delivery platforms such as Uber Eats and Deliveroo have also had a major impact on the restaurant industry said Carol Salloum, who operates Middle Eastern eatery Almond Bar in Darlinghurst with sister, Sharon.
“When the delivery platforms are charging 30 per cent fee per delivery, it’s almost impossible to make a profit with them,” she said.
“I thought we had to sign up to them to expand our customer reach, so I justified the delivery fees as marketing costs, but I would have been much better off paying that money to a marketing professional instead.”
“Delivery platforms can be great if you’re a business with low costs specialising in one type of food such as burgers, fried chicken or pizza,” said Chris Baskerville, partner with specialist insolvency and business recovery firm Jirsch Sutherland, which has managed several Sydney restaurant closures.
“For a traditional restaurant with already tight profit margins, however, delivery partners are not always the greatest fit.”
An increasingly challenging restaurant industry means Sydney operators are adapting their business models and looking at new solutions to attract fresh customers and retain regular patrons.
“The restaurant game is a duck,” said John Fink, creative director of Fink Group, which operates Opera House fine-diner Bennelong, three-hatted Quay and Otto. “You have to look graceful swanning across the pond, but under the surface it’s a different story.”
Solutions for a changing industry
Cutting back on seafood and meat
“Lamb and beef have increased exponentially over the past year with the drought,” said Paul Dewhurst, operations manager of Three Blue Ducks at Bronte and Rosebery. “Seafood has also increased as demand is growing with more people moving away from meat. We’ve just removed prawns from the menus – justifying $33 to the customer for three prawns in an entree just wasn’t feasible.”
Ditching the delivery apps
Carol Salloum has stopped using delivery platforms and instead offers a 10 per cent discount on all takeaway collected in store. “I find people just want a discount all the time, no matter if it’s food or clothes, she said. “I figured if that’s what it’s going to take to bring people in, then fine – we can afford a 10 per cent hit without losing money. It also means we’re able to hand food directly to the customer and create a relationship, which is important for return business.”
Opening longer, more often
Extending a restaurant’s opening hours is vital to keep business ticking throughout the day. Bennelong has just started opening for lunch on Thursday, for instance. “It allows us to keep the bar open between lunch and dinner,” said John Fink. To launch the additional service, the kitchen created a special “House Lunch” menu featuring an exclusive duck and kumquat dish. “This acted as our ‘shiny ball’ to attract attention and appeal to a broader audience,” said Fink.
Shorter menu options
Clayton Wells, chef and co-owner at Automata and A1 Canteen in Chippendale, is now offering a concise version of his Automata menu for customers keen on an “in-and-out” experience. “We’ve always served a five and seven course menu at Automata and this winter we introduced a new option – our On the Fly menu, which is three courses plus snacks,” he said. “It was so successful that we’ve kept it on.”
Special kitchen guests
With increased market competition, restaurant operators are looking to make their business stand out with merchandise, special events and guest appearances by other chefs. “It has become really important for chefs to be aware of their own brand and be out there actively doing events and building a following that will support them,” said Wells, who hosted a clambake last week with Belles Hot Chicken chef Morgan McGlone. “We’ve always liked inviting friends to [collaborate at] our restaurants as it felt like a natural extension of the hospitality community. Now, we’re consciously bringing more people into the kitchen.”