Insolvency and business turnaround specialist Jirsch Sutherland has told The Australian that “date night economics” is hitting the hospitality industry’s bottom line.

National managing partner Bradd Morelli has predicted cost-of-living insolvency numbers will rise, while previously the ATO had been the key driver of businesses being wound up.

“It’s not a seismic shift yet but these types of insolvencies are increasing, particularly as consumers cut back their discretionary spending,” he said.

“I call it ‘date-night economics’, with householders reassessing what they spend their money on and, among other things, not going out as much.

“And it’s having a real domino effect, with myriad small businesses experiencing a cashflow hit – on top of the higher cost of doing business.”

Australian Bureau of Statistics data shows real per capita retail spending has contracted for the past eight quarters and is now 2.5% lower than June 2023 and 6.3% lower than June 2022.

Morelli said there had been a significant increase in insolvencies and small business restructuring within the hospitality sector – particularly cafes and restaurants.

Hospitality businesses failed at the fastest rate on record in the 2024 financial year due to rising food and energy prices and the drop in consumer spending.

Data from the Australian Securities & Investments Commission shows accommodation and food services insolvency appointments rose faster than any other sector in the 12 months to June 30. The number of collapses soared by 50% to a record 1667, compared to its previous high of 1114 in 2023.

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