A Free Summary

By David Parnham Research Director Café Culture International 8 years.

As a general rule the surviving hospitality sector has largely bounced back from the 18 month COVID-19 crisis, with revenue close to pre-pandemic levels measured since February 2019 for many cafes, bars and restaurants, despite ongoing outbreaks, state border closures and employees working from home.

In  June 2021 during the Café Pulse survey data capture and with the bi-annual survey now in its 8th year of cafe Industry research, we see that many coffee related businesses are in fact returning to positive trading vs. 2019.

Many CBD coffee businesses such as cafes and restaurants suffered the early smaller dips in revenue at the start of Covid-19 as they were quicker to offer takeaway, local family menu changes and delivery options.

Oversupply of cafes

The hospitality industry is on average trading at or near pre-Covid levels, however many would argue that pre-pandemic there was an oversupply of coffee businesses in most Australian CBD locations, so this is possibly the result of reduced trading and cafe closures of under-performers and independent owners who have simply shut up shop.

The oversupply of cafes in Sydney and Melbourne CBD’s and the inner suburbs before the pandemic had eased with the closure of some businesses, enabling venues still operating to attract more customers. Many of these smarter CBD owners moved OUT of the inner cities to relocate in new cafe businesses in outer suburbs and regional locations to reconnect their long term branding and extensive cafe business knowledge.

While sadly, many others simply left our cafe industry altogether due to the impact of Covid-19 reduced trading.

It’s true that some cafe venues based in CBD office buildings and caterers remained down, while suburban and regional cafes and restaurants had recovered thanks to the greater numbers of adult people working from home. Areas such as Darling Harbour, Taronga Zoo and Sydney’s The Rocks, still remain down due to their reliance on interstate visitors, international tourists and cruise passengers. Truth is most Australian Cities have had the same effect, in many ways these inner city area’s mirror the Sydney CBD impacts of Covid 19 on cafe futures and opportunities still into 2021.

Trevor Simmons, co-founder of Industry Beans, said the CBD cafe’s revenue was up 60 per cent compared to last April 2020 when the first lockdown restricted trade to takeaway only.

Mr Simmons said the pandemic had depressed trade by deterring office workers and shoppers from visiting the CBD until March 2021. “The positive is that we are now 85 to 90 per cent of pre-COVID trading and hoping to see that increase over the coming months,” he said.

Mr Simmons, who also operates cafes in Brisbane and Melbourne, said the Sydney venue had been the quickest to recover in the past six months thanks to lower case numbers and less restrictions.

He said the impact of COVID differed between states: “Brisbane was mainly back on track in early winter of last year, while Sydney took until the start of summer and Melbourne has been in perpetual state of FIVE lockdowns that have taken its toll on most CBD cafes struggling to return to the new normal trading patterns as seen in other states during 2021.

During the pandemic regional cafes have bloomed with many independent and franchised coffee chains experiencing solid growth in and out of lockdown restrictions.

We interviewed Golden Bean Winners 2020, Glee Coffee Roasters in Wyong NSW, Mr. Ben Gleeson “Our regional cafes have mostly seen a steady increase as more people opt to work from home or at their local cafe. Although it has been a different story during lockdown, with most cafes financially trending down, they are needing to find creative ways to continue to stay viable – for most, it is about survival. 

I believe our industry will benefit greatly from this in the long run – as it has highlighted the financial benefit of becoming more adaptable. Another observation is that cafes which are easily accessible for a takeaway trade i.e. on a main road with easy parking access, have been far less impacted when compared to a ‘destination’ cafe that isn’t built around that same ethos. As a roaster, I’ve found that more people are opting to drink coffee from home. We can clearly see that trend through the traffic on our online store & personally, I’ve been asked more than ever to recommend home coffee machines for each different budget.”

What has developed during the pandemic is online customer trading that had accelerated the adoption of technology by coffee/cafe lovers such as ordering apps, direct order QR codes, table-ordering systems and loyalty programs. Even coffee and cafe menu app delivery options are now becoming extremely popular.

We have found that the majority of people choose to work from home on Mondays and Fridays, so we found that the middle of the week are now our busiest days whereas it was always the brunch weekend crowds pre-pandemic. The future prediction post lockdown as the harsh Delta Virus restrictions cease will be a return of the relaxed Brunch weekend crowds  in the new cafe normal trading.

The NSW state government’s Dine and Discover scheme, which has been extended to June 2022, offers adults four $25 vouchers to spend on dining and entertainment.

More than +5 million vouchers have been used in cafes and restaurants, including 500,000 alone used in the city of Sydney’s mostly affected areas. These dining vouchers encouraged customers to order more and choose premium items from the menu, even ordering items they wouldn’t normally try.

What the future holds

For the future we will see a trend of smaller sized cafe’s in CBD / Inner City locations than that of the past “Coffice” style larger spaces, cafe’s with a focus on an enhanced takeaway menu of gourmet food and beverages. In outer suburban and regional locations cafes will both increase in overall size and menu offerings. Many existing cafes in these areas will renovate and refresh to cater for new local regular customers’ demands and many will adapt for Coffice style business meetings and staff catch ups Out Of Home (OOH).

OOH trends have also seen the recent growth of the social/casual meetings with friends and family at cafe’s, where during lockdown and for other reasons they are now staying local and catching up within their area, close to and/or working from home, with average cup sizes for takeaway beverages now reaching 12 and 16 oz. With these dine in or delivery options, we have seen many cafes with tempting and innovative gourmet food menus and matching premium beverages all benefiting from this new normal of social trends over the past 18 months of Covid 19 trading.

This report is YOUR INDUSTRY data and collectively these 201 surveys represent over 800 cafes from across Australia. The results have been compiled to help your cafe business to benchmark your coffee business vs. the Australian market place.

Download your free report or purchase the full comprehensive report at cafepulse.com.au