The new dining model driving profit for restaurants

November 24, 2019
By Alana House

Rising below-the-line costs and delivery platforms that “demand more than their fair share of the pie” are transforming the dining model in Australian restaurants.

The 2019 Benchmarking Report from Restaurants and Catering Australia (R&CA) shows a swing towards a more casual dining model as operators seek to reduce costs and maximise profit.

Tom Green, Manager – Policy and Government at R&CA said: “What we’re seeing is a ‘shrinking of the middle’ in the market. The standard sit-down restaurants that rely on the three-course model of dining are feeling intense financial pressure.

“The most profitable venues are the ones that offer fast, casual eat-in style experiences. They’re still capable of bringing in $40 a head from diners, but with much lower overheads and with much higher turn over of tables.”

The dining model trend was reflected in a significant decrease in liquor licensing among survey respondents.

In the survey that forms the basis of the Benchmarking Report, 40.4% of businesses indicated they operated as a licensed premise, a significant decrease from 60% recorded in 2018.

There was no real change in the number of businesses indicating they were licensed accepting BYO (22.8%).

The number of unlicensed premises participating in the 2018 survey (12.7%) almost doubled to 24.3% in the 2019 survey.

Businesses operating as BYO nearly tripled, with 12.5% indicating BYO Only in 2019 compared to 4.4% in the 2018 survey.

“This year’s report shows a snapshot of an industry that is under significant pressure,” added R&CA CEO Wes Lambert.

“Rising food costs, wage costs, energy costs, rent and the disruptive influence of digital technology such as online food delivery all point to a difficult year ahead.”

UJber eats delivery platforms

“Our encouragement to Australians everywhere is this: get out and enjoy your local restaurant or café, they need your patronage now more than ever.”

The biggest issues facing the industry

Data collected from the 2019 Benchmarking Survey shows that among the restaurant, cafe and catering industry:

  • The cost of wages now averages 41% of total business costs, with more than 50% of total business costs relating to staff.
  • The most significant issue currently facing the industry is a perceived inability to raise prices, with 55% of respondents listing it as their most important issue.
  • While businesses have found it easier to fill key positions in the last 12 months, more than half still report some difficulty in filling skills gaps in their business, with the position of chef continuing to be the most difficult to fill.
  • More than 75% of business owners stating they fail to pay themselves the award rate for work they do in the business, with more than 50 per cent indicating that they do so significantly or regularly to make ends meet.
  • High and increasing prices, complexity of compliance requirements and lack of education are among the main reasons listed by respondents for non-compliance.
  • 53% of businesses found that while their revenue increased as a result of partnering with online delivery platforms, their profit decreased; while 55% felt that it is impossible to make a profit from delivery due to high fees.

The 2019 R&CA National Benchmark Report covers favoured bank and superannuation funds, business expectations, outdoor seating areas, business costs, skills and labour, digital technology, use of social and digital marketing channels and the importance of serving Australian wines.

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