Tomorrow was supposed to be the next step in the recovery for Victorian restaurants — when capacity lifted from 20 people to 50.
- Plans to increase patron limits in Victorian restaurants to 50 people have been deferred due to growing coronavirus case numbers in the state
- The industry association says 10 per cent of hospitality businesses have closed permanently due to COVID-19
- There are growing calls for cuts to the fringe benefits tax for business lunches and a wine tax reduction
That’s now on hold. But in Melbourne’s CBD, it was academic anyway.
The city that’s home to some of Australia’s most famous restaurants — like Flower Drum, Vue de Monde, and Mo Vida — is still a ghost town, and likely to stay that way for months.
“If the CBD doesn’t increase in foot traffic and people working in the city by the end of September, I would find it very difficult to think we could be viable without JobKeeper,” Mo Vida’s co-owner Frank Camorra said.
Without its dining scene, he fears Melbourne’s CBD will become devoid of its “soul and vibrancy”.
“We’ve had a renaissance in Melbourne over the last 20 years in the CBD. I think we’re at a real risk of losing that,” he said.
Suburban venues starting to bounce back
It’s a different story in Melbourne’s suburbs, where the vast majority of people are now working as well as living.
Box Hill in Melbourne’s east was hit hard early when the coronavirus emerged, but is now one of the first areas to start bouncing back.
“When the pandemic started, our business dropped by 80 to 90 per cent,” said Louis Kuo, owner of Taiwanese restaurant Kitchen Republik.
“Now we’re back to 50 to 60 per cent, so it’s a good sign for us.”
Mr Kuo said he survived thanks to local customers who worked in the nearby suburbs, and a frantic pivot to delivery to meet the demand.
“We have to be more innovative,” he said.
“A dining restaurant menu is cooked ready to serve, but for delivery, we have to consider the delivery time, the temperature and how long it takes to make.
Adapting to changed dining habits
Mo Vida has also scrambled to find new ways to make money.
“We’re trying anything we can,” Mr Camorra said.
“We’re doing some of our food for supermarkets. We’ve produced some food for a takeaway delivery platform, which has a whole bunch of really high-end restaurants on board.”
Prior to the pandemic, deliveries made up around 8t per cent of the market.
Now, it’s more like 25 to 30 per cent — and Restaurant and Catering Association chief executive Wes Lambert said it was likely to stay that way.
“Diners’ habits have changed,” Mr Lambert said.
Local campaigns keeping restaurants afloat
But suburban venues have also been kept going by strong local support from residents who don’t want to see their neighbourhoods emptied of their favourite bars and restaurants.
In Melbourne’s inner north, Northcote residents Hiruni Peiris and Nicole Hahn launched a Facebook campaign urging locals to commit to buying takeaway food or drinks once a week from the High Street shopping strip and its surrounds.
“We just love this strip,” Ms Peiris said.
On the day they launched, they received hundreds of positive responses.
Northcote bar owner Phil Anderson is in no doubt their campaign saved his business.
“Put it this way — if it wasn’t for that Facebook group, no-one would even know that we existed,” he said.
At its peak last month, his bar Purple Emerald was taking up to 150 orders for takeaway cocktails a night.
“I don’t think they realise how many businesses they’ve helped in the community,” he said.
Wafer-thin margins make home delivery hard
There are still big questions about what Victoria’s much-loved restaurant industry will look like when the next phase of restrictions are finally lifted.
In smaller venues, increasing capacity to 50 diners means nothing — because venues will likely still have to abide by the rule of one person per 4 square metres, limiting them to 20 or fewer.
And while delivery has been a lifesaver, prices will likely rise.
The most well-known delivery services commonly charge restaurants a 30 per cent commission, cutting into already-wafer-thin margins.
“We’ve had no choice but to increase our prices to cover the cost otherwise we won’t make any profit,” Mr Kuo said.
“Our rent has been decreased, but our margins are still pretty slim.”
The industry association estimates 10 per cent of hospitality businesses have already closed permanently due to COVID-19.
It believes if government support is withdrawn in October as planned, that figure could rise to 20 per cent within months.
Food writer Dani Valent said the industry was oversupplied with restaurants — but those that remained would need to continue to innovate in order to survive.
“Restaurants have tried to be all things to all people all the time … I think what we’ll see is restaurants will start to focus more,” she said.
“So I think we’ll see fewer restaurants open from 8:00am to 10:00pm, during breakfast, lunch, dinner, and having five different milks on the menu.
“I think we’ll see people really homing in on their point of difference and delivering something that’s really fantastic, and really worth seeking out.
“I think for the restaurants that remain, it’s a better landscape. Hopefully, there’s more money that can be divided between them, even if there’s a little bit less money flowing through the economy as a whole.”
Calls for tax reform to help hospitality
The industry peak body wants regulation changes to get more of that money moving — like opening up more outdoor spaces for restaurants to use and removing the fringe benefits tax on business lunches.
“For me, it’s a no-brainer,” said Mo Vida’s Frank Camorra.
“A business person that’s coming to entertain clients, if they can expense that out, that would be a huge benefit to the hospitality industry in general.”
Other ideas being floated include a possible decrease to the wine-equalisation tax — a 29 per cent tax on the wholesale value of wine.
“I think that people don’t realise how much of the actual price they pay for that glass of wine and that plate of food actually goes to the Government,” Mr Camorra said.
“For a long time, restaurants have been a great way for the Government to increase revenue.
For bar owner Phil Anderson, the past few months have been unexpectedly gratifying, despite the anxiety.
“I think we’ve all been reset somehow from this. I know I have,” he said.
“It’s made me stop, really breathe and think about how lucky we are to have what we have. I just hope it lasts.”