Lockdown restrictions have now been completely eased and Victorian hospitality businesses can begin to take advantage of the increased capacity limits now permitted within their venue. To ensure your business can thrive over the coming months, it’s important to start planning now.

Restrictions

Victoria has hit its vaccination milestone which has resulted in further easing of restrictions for the state. The key changes to restrictions effecting the hospitality industry are:

• The travel ban between regional Victoria and metropolitan Melbourne has been scrapped
• Capacity limits changed to one person every four square meters for people indoors and non-seated services to up to 500 fully vaccinated people outdoors with density limits
• Masks only required indoors.

With these changes in restrictions, we can expect to see an increase in people wanting to socialise after the lockdowns. The rise in discretionary income, or disposable income, will also increase this urge, benefiting the retail and hospitality industry who provide discretionary products such as a coffee or a meal at a restaurant.

COVID-19 grants and support programs

The government has provided a range of support packages to businesses within the hospitality industry throughout this pandemic to assist with covering costs. The support packages that remain open are:

• COVIDSafe Outdoor Activation Voucher Program
  • This program will support businesses to reopen in a COVIDSafe manner by moving activities outdoors

• Commonwealth COVID-19 Disaster Payment
  • This support payment is to support eligible workers, micro-business and sole traders impacted by the Victorian public health orders

• COVIDSafe Deep Cleaning Rebate
  • This rebate is to help business cover the cost of cleaning a worksite due to it being connected with someone suspected or confirmed to have COVID-19.

Industry performance, key success factors and benchmarks

During the warmer months it is important to ensure your business is performing well and continues to meet or out-perform your budgets set out to cover the less profitable months brought on by winter.

We recommend reviewing your business performance against the following benchmarks as a guide for how your business is operating:

Benchmark	Cafes & coffee shops (%)	Restaurants (%)	Pubs & bars (%)
Cost of goods sold/turnover	26	27	20
Wages/turnover	37	34	43
Profit/turnover	4	4	7

We’ve provided a breakdown of the current industry performance and key success factors for three distinct groups within the hospitality industry.

Cafes & coffee shops

Industry performance

Cafes and coffee shops have become increasingly popular for people to spend their leisure time or to enjoy as part of other recreational activities which has led to an increase in industry growth. Many people are also living busier lifestyles, which has led to greater demand for fast and convenient food and dining options. This has benefitted cafes and coffee shops greatly due to being able to provide on the go items, as well as fast and efficient services.

However, the COVID-19 pandemic has placed enormous pressure on the industry’s growth as dine in options were no longer permitted.To combat this issue, cafes and coffee shops began providing a range of delivery and take away options as another source of income.

With restrictions now easing, AFS recommends businesses continue to provide these options to create additional income over the coming months.

Key success factors

• Business expertise of operators: Businesses require employees with a high level of expertise who can perform multiple roles to succeed in an industry that displays a low profit margin
• Effective cost controls: Cafe and coffee shop operators that can minimise costs and wastage, especially regarding food inputs, can help maximise profit
• Effective quality control: Cafes and coffee shops must consistently prepare, present and serve coffee and food items of a high quality to satisfy customer expectations and maintain positive word-of-mouth referrals.

Restaurants

Industry performance

Industry growth for restaurants has begun to slow down over the past few years, largely due to rising competition brought on by the fast food industry and the current operating restrictions brought on by COVID-19 which has severely affected restaurants over the past months, hindering revenue generated from dine-in operations.

Prior to the COVID-19 pandemic, consumers had shown an increasing appetite for restaurant dining over the past few years as mid-range and casual dining options have grown in popularity over the period, particularly as more of these types of restaurants have opened in major cities and integrated with online food delivery services such as Uber Eats. COVID-19 lockdowns also increased uptake of these food delivery platforms, boosting takeaway revenue for many restaurant operators.

Key Success Factors

• Access to niche markets: Restaurants that have a reputation for high-quality food and appeal to a small, dedicated clientele are typically less vulnerable to competition
• Effective cost controls: To maximise profit, industry players should minimise costs and wastage, especially with regard to food inputs and rent
• Access to multiskilled and flexible workforce: Restaurants that have a large number of skilled, casual and permanent wait-staff, cooks, chefs and kitchen hands are better able to maintain the high level of service that consumers increasingly expect
• Ability to alter meals produced in favour of market conditions: To maintain customer flow, industry operators must be able to alter menus to respond to consumers’ changing tastes.

Pubs and bars

Industry performance

Pubs and bars have faced difficult trading conditions over the past years due to rising health consciousness in relation to alcohol consumption, as well as government regulations aimed at curbing binge drinking, alcohol-related violence and problem gambling.

However, the COVID-19 pandemic has had the most effect on the industry, forcing temporary closures of industry establishments for extended lengths of times. The easing of restrictions and rising average discretionary income are expected to help industry revenue rise by 10.8% in the current year.

Key success factors

• Proximity to key markets: Industry establishments need to be located in high-profile and high-traffic areas to attract customers
• Having a loyal customer base: Industry operators should develop a regular and repeat customer base to achieve revenue stability. Operators can achieve this by offering facilities and hospitality that are attractive to consumers
• Highly trained workforce: Industry establishments require well-trained employees at all levels of operations to maintain quality service and ensure compliance with all regulations. Ongoing staff training and support can help maintain workforce standards
• Ability to control stock on hand: Industry operators must have effective inventory control. This involves ensuring that no shortages occur and limits excess stock on hand. Reduced stock on hand can minimise inventory handling costs and spoilage, and improve profit margins.

Use of events

If you’re wanting to increase interest and foot traffic within your venue – a great way to do this is by hosting events when possible.

Events are a great way for businesses to stand out amongst competitors, as well as appeal to new audiences.

Events can also gain interest from local news outlets, as it gives them an opportunity to write about what is happening within the community.

If you would like assistance planning your operations, or would like to know how we can help your retail and hospitality business, give Josh Gordon a call on 03 5443 0344 or email afs@afsbendigo.com.au