Restaurants are heading into Winter (typically the slow season) with the added challenge of reduced spending by dinners and rising costs One in 13 hospitality businesses are predicted to fail in the next 12 months, and there are approximately 36,000 restaurants nationwide and if predictions are correct this would mean 5000 businesses close. Rent, wages, ingredients, electricity, insurance have all increased however prices have not kept up. The hospitality industry is unable to pass on price rises like other sectors as they are limited to the public perception as to the price of a coffee or sandwich, there are certain price ceilings. Cost of living pressures have resulted in reduced spending on dining out making it a difficult time for the food service industry after the rollercoaster of the past 4 years with pandemic shutdowns followed by the ‘revenge spending” that created a rebound to levels higher than pre-pandemic. National Australia Banks’ consumer sentiment survey has found 57% of consumers spent less on dining out in the March quarter with an average saving of $122 per month. High income diners were slightly more likely to reduce their earing out budget than lower income groups which suggest that this cutting back affects restaurants at all levels from cheap eats to high end dining. Those in the industry believe interest rates coming down will change the current trajectory. 

What does this mean for Berries? 

With food service industry challenges and potential for closures, this will affect the berry industry in terms of demand for high spec fruit which typically services restaurants and gains a premium over standard fruit sent to the central markets. With consumers cutting back on dining out, this typically translates into increased spend at the supermarket and a growth in eating at home and meal preparation with berries to benefit from the treating occasion. Another consideration with potential restaurant closers is the exposure via payment terms. 

SOURCE: Valent, D. (2014, May 25). ‘Shutdowns paint a scary picture’. Sydney Morning Herald