Data from ASIC show insolvencies in the hospitality industry have increased by 70.2% year on year as the cost-of-living crisis deepens.
The number of hospitality businesses that have faced insolvencies in the current financial year has risen to 1312, compared to 771 in the same period a year ago.
The Australian has reported that “cost pressures from higher wages, energy bills, food inflation and increases in alcohol excise, coupled with penny pinching consumers, have hurt hospitality businesses, with many closing their doors across the country.”
Australian Hotels Association chief executive Stephen Ferguson said: “There’s only so much you can put the price of a schnitzel up, as people will stay at home and cook one themselves. It’s a challenging balance between providing something that is affordable and also will allow you to pay the bills.
“Businesses are being hammered by the cost of operating a venue despite revenue doing OK. It is all those input costs that add up, such as food, beverages, excise, energy and insurance. All this pressure is making it harder for many to survive.”
Melbourne’s KAIJU! is the latest craft brewer to enter voluntary administration.
Co-founder and CEO Callum Reeves told The Crafty Pint the decision was made due to the level of debt they were carrying, including an excise bill owed to the Australian Taxation Office (ATO).
“I’m really confident about the business going forward; we’ve had a really good couple of months, it’s just we were never going to be able to work through the debt,” Reeves said.
KAIJU! will continue operating as usual during the voluntary administration process, keeping the doors to its Huntingdale brewpub open.
Household spending drops in December
The CommBank Household Spending Insights (HSI) Index fell by 1.8% in December 2024 after a strong Black Friday sales spending boost in November.
The fall was driven by an 8.3% decline in spending on household goods, such as clothing and department stores, as many consumers had brought forward their spending to take advantage of sales activity in November. December also saw relatively large declines in spending on hospitality (-2.6%), food & beverage goods (-2%) and recreation (-2%).
“The fall in household spending in December and subdued growth throughout 2024 emphasises that the consumer remains cautious. As we’ve seen in past years, sales spending on items like household goods was brought forward to October and November to take advantage of Black Friday sales promotions, which resulted in a drop in December,” CBA Chief Economist Stephen Halmarick said.
“The weakness in spending in December, combined with the improving inflation environment, supports our view that the RBA can begin to lower interest rates at the first meeting of the year in February. We expect 100bp of monetary policy easing through 2025.”
The CommBank HSI Index tracks month-on-month data at a macro level and is based on de-identified payments data from approximately 7 million CBA customers, comprising roughly 30% of all Australian consumer transactions.
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