The state of the hospitality industry has, over the last five years, been impacted by a series of challenges – stemming from the COVID pandemic, staff shortages, ‘revenge’ dining and recent cost of living pressures. Hospitality as an industry however, continues to show incredible resilience in its ability to navigate these challenges and adapt to change. In a recent conversation with OpenTable, Sydney hospitality leaders shared how the challenges have impacted their business and what the future holds for the industry.
Take a seat as we delve into conversation.
Setting the agenda
Hosted in Sydney’s Ace Hotel in collaboration with the Australian Restaurant and Cafe Association (ARCA) and led by Drew Bowering, Senior Director of Sales & Services APAC, the discussion centered around two primary themes: the current and future state of the industry.
Our panel of esteemed industry experts featured Alex Prichard (Iceberg’s Dining Room & Bar), Palisa Anderson (Chat Thai, Boon Luck Farm), Andy Tyson (Pellegrino 2000, Bistro 916, Clam Bar), along with Wes Lambert (ARCA).
Culinary Director, Iceberg’s Dining room and Bar
Director at Chat Thai, Boon Luck Farm
Owner Pellegrino 2000, Clam Bar, Bistrot 916
CEO, Australian Restaurant & Cafe Association
Business viability amongst a dynamic economy
Drew reflected on the current state of the industry, noting significant challenges for operators such as staff shortages, border closures, and the trend of ‘revenge dining’ among customers. Presently, the industry is grappling with economic hurdles, as highlighted by the latest June quarterly GDP report, revealing that the economic growth for this financial year (excluding the COVID years) is the lowest on record since 1991-92.
Wes reinforces the impact this had had on operators, adding ‘[in the last] five years, businesses have had to put their menu prices up, just to make the same profit margin that they made in 2019’.
To understand the shifts in diner demand in the current landscape, Drew passes to Palisa to explore how the diner landscape has evolved throughout her career and what she makes of its current standing.
Palisa observes that while the industry is now more diverse, offering a wider range of cuisines at more accessible price points, has stimulated greater demand from a new wave and demographic of diners.
‘What diners expect is a lot more centred around convenience, centred around timeliness. No one’s willing to wait anymore. They want everything at the touch of the screen’, Palisa states. Adding that restaurants need to do more to manage such a demand.
Drew throws to Andy, asking how he manages to remain passionate and motivated while operating a restaurant in the current industry.
‘There’s no room for bad business, like you’re being very calculated about what you’re doing.’ Andy reflects, referring to the opening of his second restaurant, Pellegrino 2000, during the COVID lockdowns. Being ‘very calculated’ and logical with business decisions, helped Andy and his partners stay afloat in recent times.
The discussion shifts to explore the flip side of the economic environment, with Drew throwing to Alex to understand how the customer perception of value, given the economic landscape, has impacted their operations.
‘[Icebergs Dining Room and Bar] is seen as a restaurant that before even entering the door, people have this perception of it being insanely expensive‘ says Alex. Adding that in a complete juxtaposition, the RSL below them served burgers and beer at a higher price point than that of Icebergs Dining Room and Bar. Having to cater to a variety of demographics whilst managing this perception of value has been challenging, Alex adds.
‘How is this possible? …It’s the customer’s perception of value… How do you crack that when the numbers don’t lie, but the perception’s still there?’ says Alex.
Dining trends and consumer preferences in 2024
Drew highlights that solo dining is the latest trend among diners, with OpenTable recording a 12% year-on-year increase in solo dining, spurred, likely by Gen Z. This is complemented by a noticeable growth in earlier dining times and a decrease in later sitting reservations.
The strategy to navigate this trend at Icebergs, is offering tailored experiences through events, in an attempt to bring back the late night economy, Alex mentions.
For Palisa, ‘CBD venues get that tourist family group in during the 2 PM to 5 PM mark’, followed by office workers and people visiting town at her venues. As a means of navigating this, rotating the roster to ensure staff are available to assist with preparation during those slow times has helped Palisa and team.
‘And I find that if you are open consistently enough… everyone else is closed…they come’. Palisa adds, referring to the consistent diner flow at Chat Thai.
Andy adds that post COVID, diner trends have changed, forcing restaurants and operators to ‘eat the costs until you build a reputation [to succeed staying open for the late night economy]’.
Restaurant innovation and new business models
Drew talks to the increasing levels of innovation as restaurants look to not just survive but to thrive in the current landscape. New business models such as pop-ups, tiny dining, collaborations, one-off unique experiences have taken the stage in Australia.
Data shows that this has a significant role to play in revenue generation, in Sydney. Customers that book dining experiences, over the last year, have shown to spend 35% more on average compared to a standard booking.
Drew throws to Alex to explore the thinking behind their one-off experiences and events that have proven to be successful in the last few years.
‘The math on it tells us that doing lower capacity, higher spend, and a more tailored experience worked better for us…That gives customers a perception of value…people like that point of difference.’
Alex recounts how Bondi Icebergs collaborated with Michelin Star Chef Hiroyuki Sato and over 3 lunches and dinners with 10 people per dinner, they were able to price at $1,000 a head.
Palisa talks about how consciously integrating the story of Boon Luck Farm in the business model of their restaurant, has allowed them to better connect with diners from a sustainability perspective. Thereby creating value in their offering and encouraging diners to dine with them.
Digital transformations
The panel discussed how restaurants have embraced technology in recent times from front of house all the way to back of house.
Drew asks Andy how operators should consider the cost of implementing technology and what they should be thinking about as a business?
‘It generally comes down to what’s essential and what do you think will help in a time of need with technology generally’.
‘Hospitality is a foundation industry. So it takes a lot of human power to make it work.’ Andy adds.
Wes adds that ‘artificial intelligence can help you to make your business more efficient. Menu engineering, content for social media’.
‘It’s really important to be looking at AI for “how do I enhance my business” and “how do I take the data that I get from OpenTable and your other technology sources and then put it through AI’.’ Wes adds. AI can do most of the heavy lifting for operators that perhaps would fall outside of the general thought process, he adds.
‘So overall, we’re talking about looking to use it to enhance your business, not to run your business, Wes says.
Future outlook
Drew asks the panel what piece of advice they would give to emerging restaurateurs.
Palisa says to ‘embrace the technology and see how it can help your business because this is the world we’re living in now. And there’s no point trying to reel it back, because it’s not coming back’.
‘When you’re making your first business plans to determine whether or not a space is good… don’t forget to include your admin or HR costs.’ says Wes.
Andy says that working for a restaurant kitchen and being able to carry out the tasks required, will set future operators up for success when they run their own businesses.
Wrapping up
The discussion concluded with a Q&A and an audience engagement session. The panel discussed how they would navigate the emerging trends around dining, specifically regarding the younger generation. Finally discussing the key areas of learning as a restaurateur, providing nuggets of advice and insight for the audience.
