The cost of serving up a sandwich with a cup of coffee has hit the roof across Australia's vaunted cafes, squeezing profits and forcing a wave of closures for those that managed to survive the COVID slump
The A$10 billion Australian cafe industry, the world's biggest outside Europe per capita, is shaping as an early, visible casualty of a perfect storm of rising utility bills, produce costs, wages and rents plus a slowdown in discretionary spending brought on by interest rate hikes, say economists and people in the industry.
The result is smaller profits, a shrinking pool of regular customers and business owners heading for the exit. "When you look around Sydney and you look at so many businesses for lease, institutions from when you were a child just completely gone now, people losing their livelihoods - it's scary times," said Krigstein.
Australian Securities and Investments Commission data showed business insolvencies in May at the highest monthly rate in eight years as COVID-related government protections expire. To combat inflation, Australia's central bank has raised interest rates by 400 basis points in 14 months, the fastest tightening in a generation. It paused in July but warned it may resume hiking if inflation, still running at 7%, fails to slow.
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