Restaurants in Recession?
Noodlies, Sydney food blog can’t help but note it’s been a tumultuous time for some fine dining restaurants, with seemingly one announcement after another of restaurants closing or going into administration:
- Berowra Waters Inn closed on 24 June. The high profile, high end restaurant has been trading since 1977. According to restaurateur Dietmar Sawyere, the business is still successful but was forced to close due to the failure of the parent company. In particular Ad Lib, which is part of the group, has been struggling. According to its website “all options are being considered and we are very confident the business will reopen shortly”.
- Pier Restaurant will close on 31 July after 21 years. Greg Doyle, owner and chef of Pier, will step away from the restaurant. The Sailors Club, a new, more casual dinner will replace Pier and will be run by Doyle’s daughter, Jacqui Lewis, chef Steve Skelly and manager Sharon Collins. The Sailors Club will open on 11 August. Doyle denies he was forced to close Pier.
- Cotton Duck, Jared Ingersoll’s Surry Hills restaurant closed in March “with the kitchen relocating to Danks Street Depot” according to their website.
- Montpellier Public House closed in May. Chef Matt Kemp reflected things might have been different if he had a financial backer and a greater grasp of business skills.
- Becasse, chef and owner, Justin North announced on 7 June that his stable of restaurants and food businesses will go into voluntary administration. Since then, Etch has closed and Le Grande Cafe has changed hands. Becasse, Quarter Twenty One and Charlie & Co, all located in Westfield Sydney, are still trading.
There’s been extensive press coverage including Scott Bolles (Sydney Morning Herald, 8 June), Katie Walsh (Australian Financial Review, 20 June) and in particular Anthony Dennis’s cover story in this week’s Good Living (3 July).
Much of the coverage has reported the industry’s perspective on these closures. In an Opinion piece for the Sydney Morning Herald (5 July), I looked at the issue from the diners’ perspective:
Gulp – diners discover twice the price isn’t twice as good
By: Thang Ngo, July 5, 2012
A few months ago, we celebrated my partner’s second book deal with dinner at a feted Sydney restaurant. Wonderful food, great service and stunning harbour views. The bill for the evening, including a moderately priced bottle of red, was almost $500.
A couple of weeks ago, we flew to Asia on a low-cost airline (including checked luggage) for $140 more than that meal. It seems like the rest of Sydney is doing the price comparison too, if recent news is anything to go by.
Foodies choked on their blue cheese macarons when Justin North announced last month that his stable of restaurants had gone into voluntary administration. The jewel in the group’s crown was the two-hatted Becasse restaurant. It seated just 25 people in an opulent environment that included crystal chandeliers and ostrich-skin leather table tops.
Becasse is the most recent in a growing number of high-end restaurants to hit hard times. The Berowra Waters Inn, Ad Lib, Bilson’s, Cotton Duck and Montpellier Public House have all closed.
Even new ventures have been put on hold – Adam Liaw, MasterChef 2010 winner, has shelved plans for a Surry Hills bistro.
Those in the industry have many theories for the string of upmarket closures: oversupply, rising operating costs, Sydney’s vain preoccupation with its waistlines, the rapid expansion of some restaurant groups, lack of business skills and/or financial backers with deep pockets. But according to the latest Australian Bureau of Statistics data, discretionary spending on dining out is up 13.3 per cent. So, people are eating out more, even if they’re not doing it at fine dining restaurants.
In online forums, Sydney diners are being open about why they’re shunning upmarket restaurants. Comments at smh.com.au this week have been very direct. For example:
“It’s not just the number of restaurants, but the level of competition and at last the public recognising the ‘value for money’ aspect of eating out. The last time we ate out in the city with one drink before three courses, an average bottle of wine, a coffee and a digestif, we paid no less than $175 per head. Recently went to a well respected high quality (and full!) local Thai restaurant and we ate for $45 per head excluding wine – and it was superb. The BYO surcharge cost $2 per head, and so the $20 bottle cost just $24 as opposed to the $74 charged at the city restaurant. Says it all, doesn’t it?”
Even on Whirlpool, an online technology forum, diners are having their two cents’ worth: “A $60 dish is not twice as good as a $30 dish (without even getting in to the $120 dish places), so very few people will be regular eaters at the more fancy places in town.”
These days, Sydney diners are spoilt for choice for low- to mid-price establishments, with long queues outside Mamak, Chat Thai, Din Tai Fung the norm. Sydneysiders search for the best food wherever it is; the ramen at Gumshara Ramen in a humble Chinatown food court is rated by many food critics as the best in town.
Good, honest, culturally diverse food in the ‘burbs is also luring many foodies; Harris Park, Haberfield, Marrickville and Chatswood attract daytrippers from across Sydney. Cabramatta is perhaps the darling – its John Street was crowned ”Fav Eat Street” by the Herald’s Everyday Eats 2012.
High-end restaurants are seeing their business market decline too as corporates become more mindful of the bottom line. In the past, sales executives took clients to the latest ”it” restaurant or the most expensive in town. They didn’t want to risk losing business because of a dud meal. These days, with so much good food available in all price ranges, it’s no longer mandatory.
So, the present spate of upmarket restaurant closures doesn’t mean we’ve become food philistines. Quite the opposite. As the stats show, we’re spending more on eating out, but we are more confident, sophisticated and adventurous and we’ll eat at a broader range of establishments from the CBD to far-flung suburbs.
It’s also healthy that the industry is fighting back. In June, Westfield Sydney introduced Tuesday Chefs Club, a $30 dinner including wine at participating restaurants, and the Herald’s Jill Dupleix has now launched a special promotion called Appetite for Sydney, which lists restaurants offering special deals.
Ultimately, however, when the specials end, restaurants will have to lure back diners who’ve decided that “a $60 dish is not twice as good as a $30 dish”.
Thang Ngo is a food writer and commentator and writes the noodlies.com food blog, contributes to SBS Feast Magazine and reviews for The Sydney Morning Herald Everyday Eats.
Twitter @thangngo
Reaction
My Op Ed piece generated an astounding 177 responses (see below). Comments are now closed, some samples below:
“…when the specials end, restaurants will have to lure back diners who’ve decided that “a $60 dish is not twice as good as a $30 dish”. We call that ‘going down with the ship’. I’ve got no sympathy for any small businessman who insists on pushing wares people don’t want & won’t pay for and then crying poor mouth – DisDis
It’s a Sydney thing. You can find fabulous food at sensible prices in Melbourne. Here in Sysdney it’s all too often over-priced & poor quality fare with pathetic service. Just sayin’… – Rex
Here we go again!! Overvalued commercial real estate has led to outrageous rents which account for more than 30% of operating costs, then ridiculous wage conditions another 30% already there’s little left for utilities (all going thru the roof) food & heaven forbid a decent stipend for the poor owner operator.Bingo! A foolproof recipe for restaurant failure or at least a quadruple bypass. – 5kwidkid
i go out to eat not for the ‘experience’ but because I am hungry. I don’t want to choke at the end of the meal when I see the bill. when prices are so high, the experience is for the priviliged few, i’m surprised its taken this long for the restaurants to start closing. – Pete
Formality, location of these high end restaurants are beyond reach most of the folks, and booking, you have to book in 6 months in advance for your meals, demographic has already move on, high class people are few and rare, a new class with full pocket of money and they are tradies call boganville, these people do not enjoy the meal for the sake of tastes but to fill up for the sake of satisfying hunger with a bottle of VB. Adapt to the new world is key to survive, that is why Thai, Chinese they are surviving due to cheap decent meals and affordable but still good tastes, and anyone can afford it, in cheap rent locations, low wages to waiter/waitresses. They are all factoring into cheap meals, unlike high end so call Restaurants. – Elite
Other reactions
It also prompted the following responses in print:
John Newtown, one of Sydney’s most respected food writers, wrote to the letters section of SMH (6 July).
Why $24 of ingredients costs $100 on a Pilu plate by Alexandra Smith, SMH (7 July), which seeks to explain the costs incurred by high end restaurants:
“WHEN Giovanni Pilu plates up his renowned suckling pork at his two-hatted restaurant overlooking Freshwater beach, the free-range pig and its trimmings have cost him $24. The price on the menu is $100 for two.
At his more casual pizzeria, the ingredients in Cavallino, a pizza topped with prosciutto, rocket and tomato, cost him $5. It sells for $25.”
Sydney’s high-class Becasse goes bust by Sue Bennett, Stephanie Gardiner and Scott Bolles, SMH (13 July), announcing the closure of Becasse restaurants:
“Sydney’s Becasse restaurant in Westfield Sydney will serve its last dinner tomorrow night. Chef Justin North announced his fine diner will close along with other businesses owned with his wife and business partner, Georgia.”
Are restaurants a waste of money by Stephanie Wood, Daily Life blog on SMH (16 July), Stephanie’s take on the restaurant closures with extensive coverage on online comments including those from noodlies’s original SMH Opinion Piece (5 July):
“I’ve been looking back at my credit card statements and trying to remember each of those 15 or so restaurant meals I’ve eaten this year. And the fact is, only about four of them were memorable. I would not return with any haste to most of them. Perhaps this is the real issue. Perhaps the magic is, in too many cases, missing.”
Jones buys up Becasse Business by Zoe Fielding, Australian Financial Review (20 July), Jones the Grocer snaps up Justin North’s Becasse restaurants:
“Jones the Grocer has bought Becasse, Quarter 21, Becasse Bakery and Charlie & Co at Westfield Sydney. “
Inside the death of a fine dine by Zoe Fielding and Jemima Whyte, Australian Financial Review (21 July), detailed reporting of the financial situation including sale price:
“Bécasse Bakery and Charlie & Co will keep trading, with the businesses having been sold late on Thursday to Jones the Grocer for $430,000 – a consideration that covered the fixtures and fittings needed to keep on trading more than any goodwill left in the brands.”
Update: The Diary in The Australian’s Media Section (30 July) reports the AFR’s apology in relation to the above article:
“The article ‘Inside the death of a fine dine’ in last weekend’s edition of The Australian Financial Review said Neil Perry was among the top chefs who had crashed and then started again. This was incorrect. While he has closed some restaurants in his 37-year career, Mr Perry states he has never left any debts or entitlements unpaid. He currently runs seven restaurants with 520 employees and consults to Qantas. The Financial Review apologies to Mr Perry and his partner Trish Richards for any embarrassment caused.”
Celebrity chef Justin North’s appealed to the Australian Tax Office to help secure unpaid super by Jonathan Marshall, Sunday Telegraph (29 July), staff working for the Becasse group had alerted the ATO six months before the group’s closure:
“…staff complained to the ATO earlier this year but nothing was done to resolve the situation before the Becasse group collapsed this month owing more than $4 million.”
Becasse wine goes to auction by James Atkinson, The Shout (1 Aug)
“GraysOnline has been appointed to auction the wines salvaged from Becasse, Quarter 21 and Etch, which will mostly be sold as singles or small packs.”
What do you think?
- What’s really behind these closures? Is it costs, prices, financial management?
- Is this the end of the closures?
- What does the future look like?
- Do you think Berowra Waters Inn will reopen?
Leave a comment here and join the discussion…
Read your article via Jackie M’s tweet. Really enjoyed it and sort of see the same trend here in Brisbane, although we don’t have as high brow or as saturated a restaurant scene as Sydney.
Thanks for the feedback Melissa, it’s an interesting time for the industry.
Great post! As you know, I’m a travel writer who writes a great deal on food, along with my writer-photographer husband, and a lapsed Australian who has lived overseas since 1998 and spent most of my time in the Middle East, Europe and Asia. We returned here (gulp) almost a year ago to visit family/friends and subsequently found ourselves working on dozens of mainly food-focused travel pieces for overseas publications, and as part of that work we’ve got to eat in most of Australia’s best restaurants (at all levels) and meet many of its greatest chefs. I’d like to add a few observations:
* Eating out in Australia, in all cities (not just Sydney), can be extraordinarily expensive – especially for people earning foreign dollars. Possibly the only city in the world that’s slightly more expensive is Tokyo. $36-45 for a main ($60 someone mentions above – ouch!) and $50-70 for the cheapest bottle of wine – these are truly shocking prices. Yet these are prices many Australians seem willing to pay, but you would simply never consider paying elsewhere, except at the very top tier restaurants. Even cheap eats in Australia are comparatively expensive to other countries. While many Australians can afford these prices (and many can’t), they increasingly don’t want to pay them, when there are so many tasty cheap eats around.
* Chefs will argue they need to charge high food/wine prices to cover overheads like staff and rent and the costs of fine quality produce. I do see their point. Staff salaries are very high in Australia – waiters overseas would kill to earn these incomes. I overhead a conversation about salaries between waiters at one of Melbourne’s top fine dining restaurants. They were earning in one weekend shift twice the rate of what Australian newspapers pay freelance writers for a feature story! But these high salaries have come to be ‘normal’ and who is going to take a pay cut? But I think dramatic
* It’s not only Sydney restaurants that are charging these prices. I have seen ridiculously priced meals – even coffees! – in Melbourne. And I’d argue that Sydney and Melbourne restaurants are both suffering and wondering when some Melbourne restaurants will start closing too. Over the last year we have continually heard chefs complain about how hard it is to fill tables at lunch and nobody wants to eat out on weekends anymore. We’ve spent most of our time in Melbourne. We’ve seen a lot of empty restaurants there too. Perhaps Sydney has felt the pain sooner because rents are higher?
* We’ve also seen a lot of packed restaurants – Otto (Sydney) and Rockpool Bar & Grill (Sydney) any lunch time; Sepia (Sydney), always buzzing; Dandelion (Melbourne) after 6pm; Golden Fields (Melbourne) any night; The European and Chin Chin (from the moment the doors open to when they close), etc – and there’s a real mix there, from Italian and steaks to Vietnamese and Thai, fancy and casual. So while I definitely agree that there’s an increasing desire for more casual affordable eating, there are still a lot of people who are prepared to pay a lot for top quality food and a fantastic atmosphere.
From an outsider’s perspective, the answer is simple: Australia needs to become a whole lot cheaper – the Aussie dollar needs to drop and prices need to drop – because let’s face it: the high Aussie dollar and high costs are also keeping the tourists away who could be helping to save these businesses.
I have to say, however, that if you can afford it, Australia is one of the world’s best eating destinations – we’ve had far more consistently great meals here, in Sydney and Melbourne, than we’ve had in foodie cities like Paris, New York and London.
I wish Berowra Waters Inn would re-open – we had one of the best meals we’ve had in Australia there recently, just weeks before it closed, and the flight there that’s the prelude to the meal is one of those memorable must-do experiences that you remember your whole life. We will.
Hi Laura, what a wonderful, well thought through comment, especially with an international perspective.
Totally agree, As a long term visitor, (14 years) I cant believe how much prices have increased, so much so I wonder just how people can afford them, till I realized, most people who live here that I know pay for everything on credit…when your bank is willing to offer you 6 times your salary in loans, you really do have a future problem! The local newspapers seem to gloss over the economy and never really discuss it in real terms, or for that matter ask the people in the street their views. Its not just food that is hugely expensive here, everything now is, and like the reader above mentions this will greatly affect the tourist section, which is has a big part to play, my other concern is the amount of traffic and the terrible road blocks!! Rush hours or should I say rush day, lasts All day, and is even worse at weekends, outside of Hong Kong and India, this is the worst traffic have every seen, and I have driven through the whole of Europe…problem is, its only going to get worse and nobody seems to be bothered or make a fuss about it! Sydney I feel is pricing its out, and I do believe, like the London crash it will go the same way in a few years, all I hear now is people working to save and then they want out, people want quality,and although a once lovely city, its become too big, too impersonal, and a huge rat race, which is a shame, but like everything in life, I,m afraid one day soon it must pay the price.
Top end restaurants are in deed downsizing their quality by outsourcing ready made ingredients to overide ever rising cost in particularly rent & wages. So one would expect the cheap end cafe styled restaurant is much more better in quality & value for your money.
How can you compare a dinner in Cabramatta! where you are being served two green leaves and some prawns imported frozen from Thailand in a broth or some mistreated battery hen swimming in a pool of sauce to eating at a fine dining establishment. As a diner there just is no comparison for me. You get what you pay for. Australians need to think more about what we are eating, where the food is coming from and how that food is produced. Also remember that city restaurants have rents to pay which I would say are a lot more expensive than Cabramatta.