Covid Chronicles: Sydney’s Food Scene Drops by 80%
Whether you’re fully engaged in the fear frenzy or just living your normal day to day life, Covid-19 is dominating global conversation.
While France shut down its hospitality industry, our Prime Minister has decided against a lockdown for now and has encouraged all businesses who can operate to continue doing so. Despite this decision, the downturn in trade has already commenced and hospitality venues around the country are fast becoming collateral damage to the coronavirus.
People are choosing to self-isolate or have commenced corporate work-from-home arrangements to minimise risk of exposure, all of which has resulted in cancellations en-mass across many food businesses.
Eddie Levy from Matteo and The Kittyhawk, 2 successful CBD businesses, has advised it will close its doors from tomorrow until further notice. “Our business dropped by 80% in less than 2 weeks” said Eddie. “When 85% of the corporate tenants in our buildings moved out to work-from-home, we knew we were in trouble, but we never anticipated this”. “We just couldn’t make it work anymore so there was no point in staying open when there were no customers around.
The CBD in particular is hurting. With all the corporate shut-downs, our city, usually bustling with people and activity is like an early Sunday morning even at peak times”. Matteo has a third venue in Double Bay which, so far, is operating as usual and many of the staff from the CBD venues will be relocated there.
However at a staff meeting earlier this week Eddie had to deliver the news that 40 people were losing their jobs immediately.
They are doing their best to cushion the blows by offering free take home meals everyday, and also selling grocery items at their wholesale price. But food won’t pay their rent. They need money.
Nel Restaurant has been a stable and successful restaurant for over 5 years since it opened, with the 40-seater operating at capacity most nights. He hadn’t felt the affects of Covid-19 until Monday, when he received about 70 future cancellations. “Our downturn is not immediate but in 2 weeks time, who knows where we will be” says Nelly.
A successful food business runs at 12-14% margin, and assuming it’s all being banked, how long can it last? Hospitality simply will not survive in this coronavirus-climate. “It’s been really tough for restaurants” say Nelly. “First we had to adjust to the lockout laws, then we had to absorb growing fixed costs, the bushfires, the drought and now this. If you’re successful you have a back-up fund, but that can only last for so long”.
Nelly adds that he knows at least 5 neighbouring restaurants who will likely close their doors permanently as early as next week. The government have offered tax breaks but this isn’t helpful with cashflow, which is what everyone needs now. Operators are approaching their landlords and suppliers to reduce or defer payments, but that is essentially delaying debt that may never be recoverable.
This is a pandemic, not covered by most insurance policies, so everyone in the supply line should expect to take a hit. Landlords can’t continue to expect full rent payments from venues that are closed or operating at just 20%.
Meanwhile, everyone is doing their best to stay afloat and coming up with new ways to expand their income stream.
Matteo Downtown is introducing a full-scale catering service while the doors are closed providing delivery of their Italian cuisine. They are also implementing a home delivery service of alcohol at reduced prices through The Kittyhawk, which holds a bottle shop licence.
Nel Restaurant will be releasing an eat-at-home option of their famous fish pies complete with heating instructions and fresh bread. This take-home food option will be adopted by many restaurants and cafes across the city in an effort to service customers who are self-isolating or working from home.
Both Eddie and Nelly agree that even if these options don’t make money, it might just be enough to keep the business afloat and staff employed”.
For now.
Nelly is trying to remain positive. He believes people still want to come out but the ambiguity of the Government’s message is causing fear and confusion. “Stop using Uber Eats and come out to enjoy your city” he says.
mina iacono, author and café owner