The Dos and Don’ts of Opening a Restaurant in Australia Right Now – Because It’s Getting Harder

If inflation, rising interest rates and the chaos of Carmy and Cousin haven’t put you off opening a restaurant, it’s likely you’re doing it regardless.

But before you go all in, it’s important to come to terms with the state of play in the restaurant industry – and plot a plan of attack for navigating its obstacles the best you can.

To get a read on what it’s like to open a hospitality business in Australia right now, Broadsheet has spoken with chefs, owners and venue managers across the country about the main challenges facing the industry right now, learnings they’ve made along the way, and their dos and don’ts for opening a venue in Australia in 2024.

The hospitality industry is still reeling post-pandemic. Staff shortages are prolific, holiday surcharges reign supreme, property costs are astronomical, and it’s all underpinned by economic inflation. And – in a shock to no one who’s left the supermarket recently in disbelief at the lack of value for money – food prices are soaring. According to the Australian Bureau of Statistics, in 2023 Australian food prices increased by as much as 7.5 per cent (the most recent figures have them at 4.5 per cent). In the hospitality industry, where the margin between costs and profit is already so tight, this is an added squeeze.

Harry Peasnell, who recently opened Lola’s, a pizzeria in Fremantle, Western Australia, says he’s faced difficulties pricing the venue’s menu in the current economy. The pizza and wine bar focuses on high-quality local produce and imported ingredients, and prices are subject to constant variation.

“We try to use the best ingredients we possibly can … but people don’t understand how much these ingredients cost and how they’re continually fluctuating,” Peasnell tells Broadsheet.

It’s a similar situation for chef Kemi Fajemisin, who moved to Brisbane back in June to open Lekki by Little Lagos – a sister to Sydney Nigerian restaurant Little Lagos – alongside business partner Ade Adeniyi.

Fajemisin says costs vary even between cities and states.

“It’s just more expensive here in Brisbane – not only because of the cost of goods, but because suppliers get a lot of their overseas stock from Sydney, so any imported goods cost way more. We have to pay extra to get [it] shipped up here,” Fajemisin tells Broadsheet.

Choosing the site of your venue is of paramount importance, and acquiring the right space isn’t easy. The process of buying or obtaining a commercial lease is more complex than you might think. “We had everything ready … but I think it still took us over a year [to find the location],” says Fajemisin.

“We were first thinking of opening in western Sydney, but we couldn’t find anything that was suitable for our vision.”

A lot of it comes down to patience and good timing. Mischa Tropp, chef-owner of Melbourne Keralan restaurant Toddy Shop, started looking 20 months before he found a space: the former site of Mono-XO in Collingwood, which he acquired in July.

“You buy businesses for different reasons – you might want to run the business, or there might be existing chattels [equipment or fittings] that suit you, and it’s usually cheaper to buy someone out than open in a completely empty space,” Tropp tells Broadsheet.

Now you have your space, you’re ready to open, right? Nope. Apart from legal fees for signing contracts, council permits, and other unforeseen costs, there’s the issue of staff.

The impact of the pandemic on staffing in Australian hospitality has been well documented, and it remains infinitely harder to attract and retain staff than it was pre-Covid.

Dave Galvin, owner and operator of the recently rejuvenated Kirra Beach Hotel on the Gold Coast, describes the changes in the workforce in south-east Queensland.

“Even though there’s been a massive domestic migration up here, not everyone wants to work in hospitality,” he tells Broadsheet. “There’s also the lack of international travellers and students that used to work in our venues, and they’re just not coming back.”

Labour is expensive, and hospitality is rightfully moving towards fairer pay, overtime and superannuation for staff, particularly with wide-scale wage theft brought to light in recent years. Now workers are receiving more equitable treatment, meaning a big shift in the profitability of an industry that took cheap staffing for granted for so many decades.

“I don’t have a staff member … paid basically under $30 an hour, so you really have to cost the labour in your multiplication,” says Peasnell.

According to the Fair Work Commission, the penalty rate for a casual adult hospitality worker on a public holiday can be up to $58 per hour, so it’s no surprise small businesses are opting to close on these days or pass the costs on to the consumer via surcharges.

Despite the difficulties facing the industry, the romance of hospitality is still well and truly alive.

“We’re all truly passionate about what we do, believing in the product and the people around us. It’s in our DNA to continue to grow and continue what we believe in,” says Brent Savage, whose Sydney-based Bentley group opened King Clarence alongside chef Khanh Nguyen at the tail end of 2023. “Although it’s hard, it’s not impossible.”

Do: Figure out why people would want to come to your restaurant. Beyond cooking food that tastes good, what’s the emotional connection?

Don’t: Don’t try and do too much.

Do: When you’ve got a blank canvas [restaurant space], put heating or cooling in, because you never know when you’ll need it, and it’s bloody expensive to install retrospectively.

Don’t: Don’t start without procedures. Delegate to your staff before you open: empower them in specific areas so they know where they stand and you’re not doing everything yourself.

Do: Find a location that fits your vision. It doesn’t have to be the best spot, but if it fulfils what you have in your mind then it’s the one.

Don’t: Don’t just depend on your own knowledge – always look for advice from people in the industry who have set up and run businesses and restaurants.

Do: Do plenty of research, and ensure [your concept is] relevant to the market and that there’s a gap for what you’re trying to do.

Don’t: Don’t rush into a venue or opportunity based on impulse. Pick the right location. The number one [tip] is pick the right landlord, because there are some good, but there are some absolutely terrible ones.

Do: Do your due diligence. People shy away from surveys and whatnot, but make sure you delve into the deal you’re getting.

Don’t: No don’ts, just do it.