Restaurants best performing small businesses: Report

A new report reveals restaurants are the best performing small businesses in the country, while small businesses in regional areas are performing better than those in cities.

According to ANZ Banking Group, which publishes a monthly survey tracking small business retail sales based on its business customers’ transactions, consumers are switching spending from clothing to entertainment.

Data for the month of April reveals restaurants are by far the most successful small businesses, with sales growing 9.2% in the year, while hotels and motels came second.

Not surprisingly, clothing and fashion retailers continue to face tough trading conditions, with sales falling 4.4% over the 12-month period.

The data confirms the findings of another report by Bankwest, which reveals the accommodation and food services sector has seen a 27% increase in the number of people running their own business in the past year. This compares with retail, which has seen an 8.4% decrease.

Bankwest senior analyst Tim Crawford told StartupSmart that growth in accommodation and food services proves that people are continuing to go out to dinner, which could be fuelled by the popularity of cooking shows such as MasterChef.

However, the ANZ survey also reveals that regional and rural small business sales were up 1.9% over the year ended in April, while city-based small businesses experienced a decline of 0.1%.

According to Ivan Colhoun, ANZ head of Australian economics, city residents are not experiencing the same level of income growth because most do not work in the mining industry.

Colhoun says higher house prices in cities also mean larger mortgage payments, which leaves less money for things like dining out.

The ANZ data comes ahead of retail sales data next week from the Australian Bureau of Statistics. Retail sales fell 0.5% in March and, adjusted for inflation, growth was flat in the March quarter.

Meanwhile, another new report by The CEO Institute reveals CEOs are more confident in their own business than in the economy overall.

The CEO Institute Business Confidence Index is derived from surveying members of the institute and measuring their attitudes towards the economy, staff, investment, profitability and sales.

The Index has a maximum value of 100 and a minimum of -100, and the latest index is based on the responses of 188 CEOs.

While the index resulted in a positive rating of 30, this is down from 45 in October 2010 and 39 in February this year.

Spokesperson Evan Davies says CEOs are more confident in their own business than in the economy overall and if the downward trend continues, business confidence will move into negative territory within 12 months.

“There were declines in all components of the index, with anticipated profitability and employment declining sharply,” he says.

“The decline in profitability and employment are at odds with the recent Federal budget, which expected increases in employment and company tax receipts.”

“While CEOs are reasonably confident about their own businesses over the next three months, they are worried about the exchange rate and the possibility of government decisions taking the economy in the wrong direction,” he says.