Restrictions may have eased further for Melbourne hospitality businesses over the weekend, but stacked up debt and ongoing staffing challenges are still pushing them to breaking point.
That’s according to entrepreneur and bar owner Maz Salt, who was recently forced to close four of his own venues, placing the businesses behind them into liquidation.
Salt will continue to operate three of his other iconic bars: Ferdydurke, shipping container bar Section 8 and The B.East on Lygon Street.
Speaking to SmartCompany, Salt says Melbourne’s lengthy lockdowns in 2020 and 2021 were “clearly” the main driver of the closures.
“They drove issues that were unresolvable, ultimately,” he says.
To the untrained eye, packed out wine bars and fully-booked restaurants may suggest small businesses in the sector are bouncing back.
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But even as restrictions lift, business owners are still facing huge challenges, such as the mountains of debt many have acquired over the past two years.
A debt crisis in hospitality
Rental agreements for small businesses were typically deferrals, as were COVID-19 tax concessions.
Just last week the ATO announced it is restarting chasing down small business debt after a pause during lockdowns.
“There’s debt everywhere,” Salt says.
“Personal debt, business debt, ATO debt — it’s a sea of red.”
Melbourne’s universities are still not operating at capacity, and many workers in public and private sector businesses are still working from home at least part of the time.
The city is also missing its usual trade from international tourism, and domestic tourism numbers are down too.
Government support was welcome, Salt says, “but I think there would be a wide consensus that it wasn’t enough”.
Now that has all dried up as well.
After two years of operating in near impossible conditions, “it’s just getting harder and harder to be a small business person”, he says.
Recovery on the horizon
Despite everything, Salt is feeling “kind of optimistic”.
He predicts that a lot of business owners will still be waiting to see how the next few months go.
Given the ongoing uncertainty, it’s hard for anyone to invest in their business right now, he says. He also has concerns about Victorian Premier Dan Andrews’ so-called Pandemic Bill.
If passed, the bill would give the Premier more powers to implement lockdowns, with no time limit on how long pandemic measures could be in place for.
“That doesn’t really provide much of a rosy picture of the future,” Salt says.
With so many challenges stacking up against hospitality businesses, it’s tricky to know what the landscape will look like in a few years’ time, he explains.
But people in the hospitality industry are “notoriously thick-headed and optimistic”.
In the long term, he feels the sector will recover. It’s not like Melbourne’ bar scene is ever going out of fashion.
“When there’s an opportunity to eat good food, drink good wine and spend some time with people, people will take it,” Salt says.