Resilience and sustainability on the menu for Australia’s hospitality industry

Australian restaurateurs are embracing diversification, adaptability and sustainability, and are experimenting with innovative ways to entice customers through their doors, according to Square’s latest Future of Restaurants report.

With inflation, rising costs, and staff and customer retention posing a challenge for restaurants across Australia, the report found many restaurateurs are reviewing their daily operations and assessing how to revise costs and increase profits. 

Overhauling menus, reducing trading hours, reviewing expenses, and negotiating costs with suppliers are some of the approaches restaurateurs have up their sleeves.

The report, which was produced by Square and online research and data analytics firm YouGov, surveyed 250 Australian restauranteurs, 260 hospitality workers and 1,000 diners about the current state of the industry. 

Of those who participated in the survey, 98% said they have plans over the 12 months to navigate potential economic headwinds.

The report also found that multi-hyphenate businesses are becoming increasingly popular in Australia, with restaurateurs using collaborations, pop-ups, food and drink experiences, menu reworks and retail offerings to attract new customers.

As well as their core services and products, more Australian hospitality businesses are now offering branded merchandise, takeaway meals, food and drink experiences, cocktail and meal kits, subscriptions, retail items and gift cards.

Butter Sydney executive chef and co-owner Julian Cincotta said he believes that operating sustainably is critical for restaurants, irrespective of economics.

“We see hospitality as a culture setter, much like the role that music or art may have played in the past. It’s something that’s always on the cutting edge of change,” he told SmartCompany. 

“With such high value placed on sustainability, and with the hospitality sector known for producing unnecessary waste, we have a big responsibility to accept and embrace more sustainable ways of working.

“But the good thing is that those who work in hospitality love a challenge, as it makes us critically think and leaves a positive impact on the world.

“However, there are definitely some things that businesses can do to become more sustainable that also have a positive effect on the bottom line.”

How Butter is changing its ways

Cincotta says Butter started its sustainability journey by recognising the amount of waste it makes.

“One thing we’ve started to do is send all organic waste to composting facilities and not landfills,” he explains.

“This is probably the biggest and simplest change that all hospitality businesses can make to lessen their impact on the environment.

“Another thing we do is working with suppliers, such as sourcing our chicken directly from the farm, which gives it a longer shelf life and reduces waste. The chickens also come in reusable creates that we send back to the farm, so there is no packaging waste as well.

“We also have a small menu, which means there’s less waste day to day. Overall, we’ve seen that these small changes are making a big impact in the long run.”

Cincotta says the restaurant is also teaming up with others to explore other ways to become more sustainable too. 

“Most notably, we’re trying to bring hospitality businesses together to start talking about sustainability and how we can reduce waste,” he says.

“We’ve been in conversations with UTS about developing reusable food container systems and processes, which will hopefully be ready to test in early 2024.”

Hospitality industry hit by rising costs

According to Square’s Future of Restaurants report, 32% of participants nominated customer retention and operating costs as the most challenging business aspects to face restaurants in the past 12 months, while 31% said staffing issues and produce costs were the most challenging. 

RMIT research fellow Dr Helen Addison-Smith says rising costs are obviously a key concern for the industry.

“But financial challenges can sometimes drive reflection on wasteful practices,” she adds.  

“The high cost of ingredients, for example, is pushing restaurants to look at how they are using and managing their ingredients, and this has led to some innovative, fun results.

“The report also highlights how restaurants are refiguring their relationships with customers, as customers and restaurants alike are affected by many of the same issues – whether it is the cost of living or climate change. 

“Sustainability innovations may not always be cheap, and may not always be easy, but they do really give the customer the sense that you care about their future, the future of your business, and the future of the planet.”

Dr Helen Addison-Smith says the Covid-19 pandemic was a traumatic time for many in the hospitality sector, but it did build links between both businesses and customers. 

“Businesses are now working together, rather than always seeing themselves in competition,” she says. 

“This is great, because it is very, very hard to be zero waste if you’re trying to do it on your own, but much more fun and achievable to build networks where issues of food waste and sustainability can be solved by the hive mind. 

“For example, local Sydney Bar, Re, and their project Never Wasted, saw them working with eight Sydney venues and suppliers, utilising their food waste and by-products to create delicious food and drinks.”