Customers encouraged dine out across Australia as part of American Express Delicious Month Out

As the hospitality sector continues to struggle across the country, restaurant owners are working on creating experiences to entice customers battling with cost of living pressures.

The latest data from the Restaurant and Catering Association industry benchmark report found a quarter of businesses surveyed made a loss in their turnover last financial year.

For hospitality businesses, May is generally regarded as one of the quietest months, attracting only 1.79 per cent of revenue.

Many are looking at ways to provide customers more incentive to dine with them, including through the American Express Delicious Month Out event launching across Sydney, Melbourne, Brisbane and Adelaide last Wednesday.

Restaurant and Catering Australia chief executive Suresh Manickam said May was a great time to discover a new local favourite restaurant with many businesses showcasing their new season menus.

“Additionally, the rush from the Christmas holidays is over so finding a booking is much easier than it was a month ago,” he said.

“More than two thirds of restaurants are family owned and operated.

“By dining out you’re supporting your local community, ensuring variety in dining choices and experiencing the tastes of the new season.

“Australia’s restaurant culture is the best in the world.

“Restaurateurs are keen to showcase some of Australia’s best produce and wine and to ensure that you have a memorable dining experience.”

In May 2023, American Express Card members spent $47.5 million at participating retailers.

Brisbane based restaurant owner Tarryn McMullen – who operates Mrs Browns Bar and Kitchen and Stratton Bar and Kitchen in Newstead – said campaigns like this were a great way for operators to be creative in providing a great space for their customers.

“We participated last year at both venues, and we had people coming in specifically for our offer,” Ms McMullen said.

“We’ll come up with something novel if we can.”

Ms McMullen said she understood cost of living had a big impact on her customers but she found by offering different experiences, it ensured the consumer found value for their hard earned money.

“Cost of living has definitely impacted customer spending, we’re still seeing a similar number of people come out but they’re definitely having a lot more discretion in what they buy,” Ms McMullen said.

“There’s a big demand for experiences whether that’s wanting to feel special or find good value for money.”

Ms McMullen said customers were now being “much more discerning about their hard earned money” than ever before.

“In terms of actual spending habits, they might treat themselves to a large bottle of wine instead of multiple cheaper glasses of wine,” she said.

The pressure to provide affordable menus for customers while also balancing the books is certainly common for many restaurants who have experienced a 46 per cent recording a drop in their net profit in the past three years, according to the Restaurant and Catering Association’s report.

Meanwhile, more than a third (37 per cent) of business owners expect their profits will decrease in the next 12 months.

Business Sydney executive director Paul Nicolaou said restaurants across the country were facing many challenges to keep afloat.

“The hospitality sector is facing an unprecedented combination of factors that have left restaurants and cafes in a fragile condition,” he said.

“The high cost of energy and inflexible IR laws are making it difficult to operate profitably.

“All of this is happening as the general cost-of-living crisis is discouraging consumers from spending on dining in restaurants and cafes.

“We know it’s tough out there but the best thing the community can do is to support the hospitality sector as fully as they can.

“Going out for a meal could make a positive difference.”

CreditorWatch chief economist Anneke Thompson said seven in every 100 food and beverage business are forecast close in the next 12 months.

“That’s by far and away the highest of all the industries,” she said.

“Certainly we see in our Credit Watch index report the food and beverage sector is being impacted probably more than any other industry.

“The rates of external admission and business failures have increased.

“A lot of the businesses are a small, a lot are mum and dad operators heavily reliant on foot traffic.”

However, Ms Thompson said customers demand for restaurant spending has been unusual in the last few months.

“Mid last year there had been the factors on the cost of living side of things but customers were still eating out in really good numbers,” she said.

“However that spend plateaued around August last year, which is unusual because we usually see it going up over the holidays.

“It seems consumers have sort of reached their limits.”

However, owners like Ms McMullen are also ensuring they put in the extra work to ensure their staff are providing the best service possible for customers.

“People still want to go out and venues like ours are still key places for people to catch up,” she said.

“We’ve spent a lot of time training and investing in our team super laser focused on service, that’s how we can stand out from our competitors.”

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