Restaurant owners increasingly optimistic about business in 2021, Deliveroo HospoVitality Index Report reveals

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Restaurant owners increasingly optimistic about business in 2021,

Deliveroo HospoVitality Index Report reveals
  • Restaurant sector confidence has grown from a tempered +9 in August 2020 to +42 (net balance) today, a huge leap in just 6 months
  • A strong workforce is key to success, with 81% of restaurant owners planning to hire more staff this year
  • More than half (55%) of all restaurant owners surveyed said they felt positive about their future business prospects
  • Small businesses are more fearful, with fewer confident of expansion this year compared to larger businesses
  • Delivery will continue be a pivotal part of restaurant business operations in 2021

WEDNESDAY 20TH JANUARY 2021

Restaurant sector confidence has grown going into the new year, with restaurant owners around the country shifting from a tempered +9 net balance score in August 2020 to +42 just 6 months later, according to the latest Deliveroo HospoVitality Index Report.

Overall, more than half (55%) of all restaurant owners surveyed said they felt positive about their own business prospects with only 13% feeling negative (+42 net balance). Businesses are more confident for the longer term with a higher score for 12 months’ time (+55 net balance) compared to 3 months from now (+37 net balance). Regardless of the optimism, restaurants are clear that challenges remain, with concerns for the state of the national economy (57%), produce prices (53%) and lower consumer spending (47%) topping the list of concerns.

The survey, conducted by YouGov, revealed workforce structure will be critical to success in 2021 with more than eight in ten (81%) restaurant owners saying they plan to hire more staff in the year ahead, indicating early signs of a comeback for the sector. This shows significant progress from six months earlier when it was revealed more than three quarters (77%) of restaurant owners were forced to employ fewer staff due to the COVID-19 pandemic.

The survey, of more than 300 restaurant owners across Australia, was conducted to understand business confidence, industry challenges, how they’ve responded to the COVID-19 pandemic and their growth plans for the future, with a particular focus on workforce structure and expansion plans.

Hiring and building out a strong workforce is a major focus for 2021. Most restaurants intend to hire casual staff (59%), while four in ten (40%) said they will hire both full or part time permanent staff.

Government support is still important, with two thirds (66%) planning to employ at least one additional staff member using the new JobMaker scheme. The sector was impacted by many valuable migrant workers being forced to return home when international borders closed. Seemingly in response to this, 38% of restaurants will look to build out their team with more staff on skilled or migrant visas.

Other signs of recovery are also expected to take shape, with 43% of restaurants planning to expand their business in the next 12 months. Half of all large restaurants (50%) expect to expand, but the other half (50%) are not so sure. Smaller restaurants are more cautious, however, with only a third (33%) confident of expansion in 2021 and just over half (51%) are not.

Of those restaurants planning to invest in their business in 2021, the priority is for new equipment for the back of house area (64%), followed by equipment for front of house (60%) and sustainability initiatives (58%), while 55% are planning to renovate. More than one third (36%) of all restaurant owners will apply for a loan to fund their expansion and investment plans, while half of all restaurant owners don’t plan to seek finance at all.

Government support is still vital to the industry with restaurant owners saying they would like government support in a number of areas to aid their ongoing recovery. The most important included: mandated rent reductions (59%), an extension to JobKeeper (43%), an increase to indoor seating capacity numbers (37%) and subsidised dine-in vouchers (36%).

As restaurants focus on a stronger 2021, the majority (59%) said they believe delivery would play a larger role than ever before, while 41% said it would remain the same. This is an eight point increase from the August 2020 survey, where 51% agreed food delivery would be important as they moved out of the COVID-19 lockdowns, demonstrating how delivery is becoming an increasingly essential element of restaurant businesses. Almost half (47%) of restaurants said delivery had increased by an average of one third (34%) as a proportion of their business in 2020, while only 13% said it had decreased. The increase is highest in Victoria where 55% of restaurants saw delivery go up by an average of 40% versus the other states.

The Deliveroo HospoVitality Index is produced biannually as a recurring benchmark for the hospitality sector. It will cover these issues and other emergent topics relevant to the industry.

Ed McManus, CEO Deliveroo:

“Last year, Australia’s restaurants demonstrated immense strength in the face of unprecedented upheaval. Last year’s survey saw a nervous sector but just six months later we are all pleased to see a more positive outlook emerge for the year ahead. This not only demonstrates the resilience and adaptability of owners across the industry, but also brings hope for a year of recovery for both the sector and the economy.

“Positive growth and investment plans for the workforce and expansion is an exciting development. Nevertheless, with outbreaks still occurring at home and abroad, challenges remain and restaurants still require support. However, if the last six months are anything to go by, our restaurants are ready and we will no doubt continue to see some brilliant innovations emerge from the sector.

“At Deliveroo, we were born out of a love of restaurants and we will continue to be by their side as they emerge from such a challenging year. We aim to support a thriving and dynamic hospitality industry – for restaurants, riders and customers.”

/Public Release.