Hospitality operators are feeling the pinch like never before, seeing insolvencies surpassing pre-COVID levels and climbing, and more publicans giving up the game claiming post-pandemic burn out.
After its record lockdowns, Victorians were dealt another blow with the cancellation of the state hosting the Commonwealth Games, due in 2026.
The lawn bowls component was set to be held in Bendigo, at the Bendigo Bowls Club, prompting many operations to commit significant investment capital into their premises.
As economic hardship takes its toll, in the wake of the cancelled entourage there are now 11 pubs on offer in and around Bendigo (Belmont, Braidies Tavern, Bridge, Brougham Arms, Court House, Goldmines, Hibernian, Kangaroo Flat, Marong Family, Railway, White Horse).
While most have worked diligently to regenerate trade and are profitable again, some have slid into administration, such as the Bridge Hotel.
The sale frenzy is leading to a lot of interest, with agents reporting seeing a “new generation of publicans” looking to take over.
Lower rents and the generally lower cost of living mean that country pubs typically enjoy higher margins than city establishments, and many are part of close-knit communities looking to support each other.
But they also need to cater to broader demographics, and a reduction in migration numbers presents challenges due to a lack of skilled workers. Plus there is the increasing hardship of finding suitable lodgings for staff in tourism-driven precincts that are bristling with AirBnB options, affecting housing affordability and local revenue generation.
And while overheads may be lower, so is the availability of disposable income in tight times, and there are many regions feeling that.
Heading out of the high interest crush, CreditorWatch reports business failures across the entire economy went beyond pre-COVID levels late 2023 and are climbing steadily.
Topping the list for insolvencies is hospitality, seeing 1,751 accommodation and food businesses entering administration for the first time, out of a total of 12,562.
CreditorWatch CEO Patrick Coghlan notes that across industries, hospitality is by far the most volatile, and “is doing the worst”, seeing a 7.5 per cent failure rate in small- to medium-sized f&b businesses.
“It’s got the highest risk of insolvency and we expect that to continue,” he bodes.
