As the COVID-19 outbreak continues to impact the global economy, hospitality businesses are struggling to maintain their bottom lines. Many operators are reporting significant decreases in trade, with Prime Minister Scott Morrison stressing that changes to lifestyle are likely to last at least six months.
Although non-essential indoor gatherings of more than 100 people have now been banned by the federal government, it will be up to state governments and local councils to workshop further measures.
Regardless of government-mandated trading restrictions, venues across Sydney and Melbourne — the two cities who have seen the highest coronavirus numbers — are already struggling to make ends meet. Frank Dilernia of Sydney group Tapavino, which has four venues in the CBD, says trade has been down 30 to 40 percent.
“Balcon, the biggest venue, was still tracking quite well,” says Dilernia. “However I can see it coming this week. We’ve got bookings cancelled. So I’m expecting the same [decline in trade] and for the other venues to be even lower.”
To counter the downturn, Dilernia turned to his email database, sending out an offer for 25 percent off at Tapavino venues to a list of 13,000 people, and blasting the deal on social media. Venues will also “fill the void between lunch and dinner” with a three-hour long happy hour.
Despite the arrangements, it’s hard to attract customers when much of the CBD’s corporate workforce is now working from home. Tapavino’s businesses will now start offering take-away on UberEats for the first time in their history.
The business owner is also talking to the group’s head chefs about making menu changes and has been in contact with landlords in hope of negotiating rent abatements to further cut costs.
None of these measures are implemented in hopes of turning a profit though. “I’m just trying to get as much cash reserves as possible to look after our staff,” he tells Hospitality. “Based on our current cash reserves we’ll have enough for two weeks holiday pay, for those who have holiday pay, and then after that is done it’ll be unpaid leave.”
It’s a tough decision to make, but staff understand the situation, says Dilernia.
The federal and state stimulus packages, announced late last week, will only go so far. “We’re in a bad position,” says Dilernia. “We have the four venues, but they’re not run as separate businesses. They’re run out of one payroll; a lot of staff move between venues and it’s a lot easier to pay payroll when you run out of one company.”
While the set-up has made running the business easier, it’s left Dilernia short-changed by stimulus packages. “So instead of us getting four times $25,000, we only get $25,000,” he says of the Federal Government’s stimulus package.
On Tuesday 13 March, New South Wales Premier Gladys Berejiklian announced further stimulus, including $450 million for the waiver of payroll tax for businesses with payrolls of up to $10 million for three months (the rest of 2019-20). It’s measures like this Dilernia says are necessary if businesses are to survive, adding deferrals on tax payments will allow businesses to get by on their cashflow.
