Just how optimistic are hospitality businesses?

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Just how optimistic are hospitality businesses?
Almost 70 percent of the industry believes informal dining will experience either large or small growth by the time 2019 rolls around. Image: Goa Prism

The future of the hospitality industry looks bright, with over 72 percent of businesses anticipating either a small or large increase in profitability over the next two years.

Despite the significant challenges faced by operators in the sector, including the skills shortage, the penalty rate structure and barriers to accessing skilled foreign workers, 23.1 percent of venues are expecting a large increase in their profitability, and 49.5 percent are predicting a small increase.

These findings from part of Intermedia’s Eating Out in Australia report, which is based on the results of two surveys conducted in late 2016: one of 1,095 foodservice venues, and the other of 1,095 consumers. It also drew on detailed analysis of the industry and ABS data.

The report found that pubs and bars are most optimistic about the next two years, with 55.1 percent foreseeing a small growth in profitability, and 30.6 percent expecting large growth. Just over 40 percent of restaurants are anticipating  a small increase in profitability, with 23.9 percent predicting that their growth over the next two years will remain relatively steady.

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In regards to the profitability of the wider industry, the majority of respondents (39.1 percent) believe it will remain about the same. Just over 36 percent are expecting a small increase in the sector’s profitability by 2019, and 18.3 percent are expecting profits to slide slightly.

The growth of informal dining
Almost 70 percent of the industry said that informal dining will experience either large or small growth by the time 2019 rolls around, and 25.3 percent argue that the sub-sector will remain steady.

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Confidence in the fast casual sector has been echoed by restaurant groups around the country recently, with Rockpool Dining Group (formerly Urban Purveyor Group) in particular investing heavily in this area, striving towards attaining its goal of becoming the country’s first billion dollar dining group.

CEO Thomas Pash told Hospitality that the fast casual space represents the biggest opportunity in Australia’s foodservice industry.

“Globally, we’re seeing a decline in fast food because people are getting a little smarter and a little more educated about what they’re putting in their bodies; they expect a better meal and better ingredients. You’re seeing a lot of that sector declining. And then with fine dining and white tablecloths, you’re also seeing that sector slowing down a little bit. But if you look at fast casual or full service casual, you’re seeing those markets continually grow, typically by three to five percent year over year, and we like that growth,” he said.

Another area of the market to watch is restaurant delivery services. Brands like foodora, Deliveroo and UberEATS are competing for the same dollar in Australia, however foodservice businesses aren’t convinced about the strength of the proposition, with 40.6 percent of survey respondents not anticipating any growth in delivery services over the next two years.

This figure however, is bolstered mostly by the clubs sector, 65 percent of which isn’t confident about the growth of restaurant delivery services. Restaurants (43.6 percent), pubs/bars and cafes (both 41.5 percent) are a little more optimistic and expect the services to enjoy moderate growth over the next two years.

The full Eating Out in Australia market analysis report, which contains over 500 pages of essential data, highlighting key trends, consumer behaviour and operators’ outlooks, costs $3,500 ex-GST and can be purchased here. 

A shorter 40 page report is also available, priced at $90 ex-GST. It can also be purchased here. 

For further information regarding the Eating Out reports, contact Hospitality’s publisher, Paul Wootton at pwootton@intermedia.com.au

 


 

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