Australian cafes feel brunt of rising inflation, interest rates

17 July 2023

Australian cafes are among those bearing the brunt of the cost of living crisis. Many are dealing with rising overheads, and reduced revenue, as their customers — who are negotiating increased rent or mortgage payments, among other things — feel compelled to reduce discretionary spending.

As a result, many cafes are going out of business:

About one-sixth of cafes advertised for sale now will close down before finding a buyer. In May, ASIC data showed business insolvencies were at the highest monthly rate in eight years. So far the insolvencies have been dominated by construction firms, but hospitality is expected to overtake it in 2024, credit reporting agency CreditorWatch said.

At a large shopping centre I visit in Sydney’s east, I’ve seen about half a dozen coffee shops close in perhaps the last twelve months. While myriad factors could account for this, including a noticeable decline in foot traffic in the centre, rising interest rates and inflation are surely also to blame.

It’s sad to see. For many people, operating a cafe is one way of realising the dream of owning a small business and being self-employed, together with creating work opportunities, both direct and indirect, for other people.