Downturn blues hit restaurants in Australia and New Zealand as consumers cut spending: ‘shops close early’

Restaurants have been forced to scale back as the global economy slows, with inflation, higher costs of living and other factors taking their toll

Australia and New Zealand’s policies to tackle slow growth have instead spooked many households into tightening their belts

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People sit outside a pub and restaurant in Sydney’s central business district on a recent weekday evening. Photo: Su-Lin Tan

Published: 12:00pm, 24 Mar 2024

While many in the Sydney suburb of Kingsford were in the middle of enjoying their Saturday night out, Susan*, the owner of an eatery called Ben’s The Thai Takeaway, was packing up her empty restaurant at 8.30pm, half an hour before its official closing time.

“Customers are saving money to pay rent,” she said, referring to a sharp rise in prices since the pandemic ended as housing supply dwindled. “Go and look on the main street [of Kingsford]. It used to be busy, but no one is out there now. Shops close early.”

Susan’s situation is reflective of a larger trend affecting the hospitality sector across Australia and New Zealand. The pandemic’s aftermath, compounded by economic slowdowns, has ushered in a period of heightened uncertainty for restaurants as numerous factors push consumers to lose their appetite for discretionary spending, particularly when it comes to eating out.

Ben’s Thai takeaway in Kingsford, Sydney, has had to scale back its opening hours. Photo: Su-Lin Tan

Susan said she scaled back her restaurant’s opening hours from 10pm to 9pm when the pandemic hit, but there had not been enough demand to change back.

Business was slow during both the city’s lockdowns and had not returned despite the construction of a new tramline a few years ago, she said. Her casual diner, located close to the University of New South Wales, still has fewer patrons even though its affordable A$14 (US$9) to A$15 dishes are significantly cheaper than many other Thai eateries in Sydney.

Earlier this year, The Fork, an online restaurant booking business owned by the Tripadvisor group that had been operating in Australia for 15 years, said it was forced to “implement cost measures” and close in the country due to the pandemic’s impact on the economy and hospitality industry.

Restaurants in Australia and New Zealand, as well as many other parts of the world, are struggling as the global economy continues to slow following the initial post-pandemic spending boom, with inflation, higher costs of living, lowered spending and fatigued trade taking their toll.

Discretionary spending such as dining out tends to suffer first amid economic slowdowns as consumers focus on paying for essentials like groceries or transport.