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:

thang ngo smh op ed 5 july 2012Gulp – 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 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 food blog, contributes to SBS Feast Magazine and reviews for The Sydney Morning Herald Everyday Eats.

Twitter @thangngo


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

Give me a meal at The Bentley any day, over one at the local Thai… – Heather

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…