Restaurants and cafes are failing at a faster rate than other businesses as consumers save money and retail rents take their toll.
All businesses face cost pressures, but rents are a particularly high burden for food and beverage venues, as they are typically located in retail areas with high foot traffic and relocating to get better deals is not easy.
Food and beverage companies were falling at the fastest pace of all industries tracked by credit reporting bureau CreditorWatch.
In August, companies in the sector were failing at a rate of 8.2 percent.
Hospitality businesses are particularly vulnerable to rising interest rates, which curb consumer spending.
CreditorWatch chief economist Anneke Thompson said conditions had deteriorated fairly quickly for the sector after a good run fueled by post-pandemic revenge spending.
But since then rising mortgage payments and rents have begun to weigh heavily on consumer wallets and spending, making it harder to raise menu prices to cover high business costs.
Other interest rate-sensitive sectors, such as construction, were also under more pressure than other parts of the economy.
Overall business failure rates had risen 17.3 percent since January and were now at their highest level since early 2021, in the midst of the COVID-19 pandemic.
Overall business failure rates had risen 17.3 percent since January and were now at their highest level since early 2021, in the midst of the COVID-19 pandemic.
Bran Black, chief executive of the Business Council, says it’s not just the economic climate that makes running a business difficult, but also political decisions.
In a speech Tuesday at the business lobby’s annual dinner, Mr. Black criticized workplace changes made by the federal government, saying they were a brake on hiring.
Premier Anthony Albanese, speaking at the same event, said job creation had been strong thanks to the reforms.
Mr Albanese expects Thursday’s labour force data to show a million new jobs have been created under his watch.
“We are proudly pro-business and pro-worker,” he said in a speech.
‘We understand that secure jobs and fair wages depend on thriving businesses, just as we know that productivity gains depend on skilled workers and safe workplaces.’
Prime Minister Anthony Albanese has defended his government’s record on job creation
Mr Thompson said Australian businesses were operating under extremely difficult conditions.
Low levels of consumer spending, high inflation and rising interest rates have been putting pressure on businesses.
However, the high failure rates also reflected a level of “bounce back” from pandemic-era lows, Ms Thompson said, with businesses that might otherwise have gone bust supported by JobKeeper payments and a pause in tax office debt collection for businesses.
