Cafe closures key indicator of two speed economy

Discretionary spending on dining out is up by 13.3 per centcompared with a 3.3% increase in retail turnover.

Spending in cafes, restaurants and takeaway food outlets rose 1.0% in May 2012.

Despite this there are a record number of restaurant closures

Restaurants have seen a 50 per cent increase in wages over the past decade & a steady erosion of profits

Pressure on margins is forcing some restaurants to find cheaper product sources

FOR IMMEDIATE RELEASE:

Australian Bureau of Statistics (ABS) research indicates that discretionary spending on dining out is up by 13.3 per cent from last year. The ABS also estimates that revenue for Cafes, restaurants and takeaway food services rose 1.0% in May 2012. The food industry is one of the shining lights in the two speed economy, as general retail turnover rose by only 3.3%.

The Australian public are spending more on dining out than they did a year ago, but last year was the first time restaurant closures surpassed openings. Stephen Cartwright, the NSW Business Chamber chief executive, said that restaurants and cafes are being ''hammered'' by an anachronistic workplace relations system that penalises small business owners with ''huge employment costs for just trying to open during peak demand periods''.

John Hart, the chief executive of Restaurant & Catering Australia, told the Sydney Morning Herald, ‘‘these days as much as 45 per cent of turnover goes out the door on wages at restaurants, and we’ve seen a 50 per cent increase in wages over the past decade.’’

The restaurant business has become the canary in the coal mine for the two speed economy. With costs rising faster than revenues, restaurants either have to find more affordable ways of doing business, or there will be more closures.

“Cafes now have the perfect opportunity to look for improved supply arrangements” said James Rento, Manager of Wholesale Direct, a leading supplier of disposable food packaging. “Most operators can’t believe how much they can save on packaging - $10 here & $20 there adds up to thousands of dollars over the course of a year.”

Despite the high level of restaurant closures & cost blowouts, there are opportunities aplenty for smart operators. Those that keep a tight rein on costs & continue to improve efficiencies will end up with a much bigger share of the pie.

About Wholesale Direct

Wholesale Direct is a leading online supplier of products to the hospitality industry. They regularly collect data and analyse emerging trends online.

They supply a large range of food service, packaging & washroom products to restaurants, cafes, hotels, take away shops, fast food outlets, clubs & pubs. Their products are well recognised in the industry, and include paper coffee cups, restaurant docket books, garbage bags, napkins, plastic takeaway containers, register rolls, toilet paper, & more. Their success is based on a simple philosophy: providing wholesale prices direct to restaurants. This means that restaurants & cafes of all sizes have access to more competitive prices on a wide range of quality products!

For further information:

Visit www.wholesale.com.au , to find out more

For press information, Robert Steers – rsteers@creativedevelopment.com.au