Queensland’s hospitality industry is in crisis mode. Insolvencies are surging, with a whopping 49% increase in the past financial year.
The state’s beloved burger joint, Wing Fix, is the latest casualty, leaving fans heartbroken.
The Perfect Storm: Why Businesses are Struggling to Stay Afloat
According to Robinson Cotter Insolvency Group director Bill Cotter, the industry is facing unprecedented challenges. “You probably couldn’t write a worse run for hospitality in particular, but small business or even business in general,” said Wing Fix owner Peter Jacobi. Rising interest rates, skyrocketing costs, and decreasing consumer spending have created the perfect storm.
The Human Cost: Owners Speak Out
Wing Fix owners Ross and Peter Jacobi are devastated by the liquidation of their business. “It’s been really tough the last five years, but in particular the last two years, since back to back to back to back interest rate rises,” said Peter. They’re not alone. Other high-profile hospitality companies that have bitten the dust include City Winery, BCN Events Group, and The Matriarch.
The Economic Reality: Soaring Insolvencies and Slowing Spending
According to ASIC, there were over 11,053 insolvency appointments in the 2024 financial year, a staggering 39.1% increase from the previous year. The construction, hospitality, and retail sectors account for about 50% of all insolvencies in Australia. Retail and hospitality have been hit the hardest, with a 49% increase in businesses collapsing due to thinning margins.
The Culprits: Rising Costs and Decreasing Consumer Spending
Wing Fix owners point to skyrocketing costs as the main reason for their downfall. “Over the past 12 months, we’ve had protein go up 30%, beets go up 25%, dairy has gone up 20%, fresh produce, 10 to 15% flour goes into our burger buns,” said Peter. Combine that with decreasing consumer spending, and it’s a recipe for disaster.
The Bigger Picture: A State-wide Problem
Business Chamber Queensland CEO Heidi Cooper says the pain is being felt across the state. “If Queensland businesses don’t see some of the critical relief they need, the risk is more businesses will have to face this decision more often.” The private sector needs support to stimulate economic growth and enable businesses to benefit from major events like the Olympic and Paralympic Games.
A Glimmer of Hope: Growth in Some Areas
A recent analysis of NAB consumer spending data showed growth in some areas, such as discount stores, which saw a 142% increase. However, restaurants and bars saw only small growth, with spending up by 0.3% and 1%, respectively.
Queensland’s hospitality industry is in dire straits. As the list of collapsed companies continues to grow, it’s clear that something needs to be done to support businesses and stimulate economic growth.