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Hospitality was always challenging; then came the pandemic. Instead of stocking up for a reset and possible recovery, Melbourne restaurants are reeling from a third snap closure. By Justine Landis-Hanley.

Third Covid hit for Melbourne food industry

An empty Bistro Thierry in Toorak, Melbourne, during the third Covid-19 lockdown.
Credit: AAP Image / Luis Ascui

Last weekend was supposed to be a saving grace for Victoria’s food and wine industry. After many restaurants were forced to close or move to takeaway-only during the state’s 112-day lockdown in 2020, Valentine’s Day, Lunar New Year and extra crowds from the Australian Open were set to make Saturday and Sunday some of the biggest trading days since the pandemic began.

Fridges were full of extra produce for booked-out dining sessions, but restaurateurs were instead greeted with the news they would have to pivot to takeaway-only trading again, as the state entered its third lockdown since the pandemic began. Conservative estimates have put the loss for Melbourne restaurants at $100 million.

Mike Byard, owner of Pretty Little restaurant in the Melbourne suburb of Balaclava, had spared no expense for the booked-out Valentine’s Day weekend.

“We were offering a seven-course Valentine’s Day menu with premium produce. We’d ordered Western Australian marron from our seafood supplier, and oysters. We were collaborating with some friends of ours who make really beautiful cakes for dessert. We’d ordered a couple of dozen single-stem roses for the table,” Byard says. “We were fully stocked.”

Despite cancelling their seafood order and offering all booked-in diners a modified takeaway version of their Valentine’s Day meal, Byard says his restaurant still lost “a couple of thousand dollars in wasted produce”.

Pretty Little had been open for only about six months when the pandemic first hit.

The goal was to create a place where a dinner out felt more like a dinner party. Diners book one of just 20 seats at a long table together and watch as chefs prepare their meals. Byard moves between seats, pouring wine and chatting to customers like any good host.

But the pandemic has transformed communal dining from a selling point to a safety hazard.

“Up until that first lockdown period, we were full most nights. And now to see that stark contrast on the other side of Covid-19 – we’re really having to consider our other options, to be honest with you,” Byard says.

“I sit here scratching my head every day thinking, are we doing something wrong? Is it just that everything is changing? Is this dining model feasible in a new Covid-normal world, or do we just have to hang tight until a vaccine comes out?”

Some restaurants have managed to pivot during the pandemic.

Shane Delia, the chef-owner behind Maha, last June launched Providoor, a food-delivery platform that allows people to order a day ahead from some of Melbourne’s best restaurants including Flower Drum, Supernormal and Movida.

At the other end of the spectrum is Fair Feed, the brainchild of Tom Jacobson of Elsternwick burger joint Smoke and Pickles. It hires unemployed chefs to create meals that sell for up to $9 a serving and are delivered to homes for a flat fee of $10.50 – $10 of which goes to the delivery driver. The business has done so well during the pandemic that Jacobson says he’s about to sign the lease on Fair Feed’s first independent commercial kitchen.

“Our production levels were up by 30 to 40 per cent this week on a regular week,” he says. “We cooked 2500 meals on Monday that we delivered on Tuesday. And on Tuesday we made another 1300 meals. We were able to bring on another six staff during the lockdown.”

But Jacobson says his chefs are still in the dark about when they’ll next get a restaurant or cafe shift.

“The guys don’t know when they are working next,” he says. “And especially when there is a delay in making that call about whether lockdown has been extended, that puts stress on a business but also stress on their staff, on their security, on their incomes.”

Many of Melbourne’s biggest food institutions haven’t been able to weather the storm.

In February last year, Chinatown’s Shark Fin House closed after 30 years when customer numbers collapsed because of Covid-related xenophobia. Flinders Lane hatted restaurant Ezard announced in June that it was closing after 20 years. Bar Saracen took to Instagram to tell fans that January 30 was its last trading day after the pandemic had left them in a “precarious financial situation”.

On Monday, The Hardware Societé, one of Melbourne CBD’s most popular cafes, closed its flagship cafe indefinitely after almost 12 years. The cafe had recorded just $391 in sales that day, about $10,000 less than a typical Monday.

But co-founder Di Keser says the decision was made as soon as Premier Daniel Andrews announced the state would be entering its third lockdown last Friday.

“As soon as the lockdown was announced I just knew we couldn’t keep opening and closing and just going through this,” Keser tells The Saturday Paper. “You used to be able to stand on Hardware Street and see 50 people queued up in front of the cafe. Now there are no queues. There are no people. This is a fight for survival, that is what it comes down to. I can’t keep bleeding that much cash.”

Pat Nourse, creative director of Melbourne’s Food & Wine Festival, warns that “every time we see a big name like that close, we have to remember that there are a number of other, unsung, places that are going under. Places you stopped at for a sandwich, for a coffee or a beer as a CBD worker, that you never knew that name of, that are just gone.”

Victoria has one of the country’s largest hospitality workforces, only second to New South Wales. As of November, more than 831,000 people work around the country in accommodation and food services, according to the Australian Bureau of Statistics. About 182,500 of those people are in Victoria.

Nourse, who has written about Australia’s food scene for about 20 years, says Covid-19 has only amplified challenges the hospitality industry was facing before the pandemic.

“Hospitality was a very challenging place before the pandemic. The No.  1 concern in the trade has been the massive staff shortages everywhere,” he says. “The pandemic has only seen thousands more taken out of the workforce: thousands of visa workers who’ve been forced to go home, but also plenty of other people who are hospitality-lifers and happy to do the work, but who have been knocked around and chosen to move into other fields.”

Running a good restaurant, in every sense of the word, isn’t easy. Managers have always had to balance paying proper wages and purchasing quality produce with charging a price for meals that won’t send customers walking, says chef David Moyle, a food editor at The Saturday Paper.

According to Moyle, whose CV includes running Melbourne’s Longsong and Hobart’s Franklin, even the most successful restaurant might turn only an 8 per cent profit.

But after almost five months of restricted trade, Moyle suspects many cafes and restaurants are struggling to dig themselves out of debt.

“Imagine investing $1.5 million into a fit-out or business while having mounting debts build without any capacity to operate in a profitable fashion,” he says. “Even a full restaurant isn’t necessarily a profitable one. And then the rental holiday finishes and those rents are not being forgotten, and occasionally pursued on unreasonable terms.”

Add to this the rise of delivery platforms, including Uber Eats and Deliveroo, which charge restaurants a commission of 30 to 35 per cent on pick-up orders. With takeaway the only option during Melbourne’s hard lockdowns, even reluctant food outlets have been forced to sign up to these platforms.

On Wednesday, there was good news, as Premier Andrews announced the five-day snap lockdown would come to an end. From Thursday, hospitality venues could reopen with a limit of one person per two square metres.

But with the state government’s hotel quarantine system continuing to be a key source of Covid-19 transmission in Australia, the hospitality sector says more certainty is needed to keep businesses afloat. Or, in its absence, ongoing financial support.

Despite Brisbane, Sydney, Perth and Melbourne being thrown into lockdowns since December, the government’s JobKeeper scheme, which provides wage subsidies for businesses affected by coronavirus, is set to end on March 28.

A spokesperson for the Department of Treasury told The Saturday Paper there are no current plans to extend the scheme, even in Victoria, where 626,000 businesses are still receiving payments, the highest of any state.

Keser says that she, like “every small business operator in Australia, is worried about JobKeeper ending”.

“I’ve always said from the outset that the federal government has been really amazing with the level of support that they provided. But it just can’t be turned off now. It just can’t,” she says.

Newer restaurants, such as Pretty Little, haven’t been able to qualify for payments. Due to their limited trading history, they can’t show that they suffered significant losses during the pandemic compared with a year prior, when they may have just been setting up shop.

Nourse fears if things continue this way, that while “smallest operators are usually the hardest hit”, Melbourne may continue to lose some of its biggest names in food.

“We’ve seen some big players and some big places close in the last 12 months. Celebrated names that have been here more than a decade. These aren’t mum-and-dad hole-in-the-wall type places. These are places with substantial turnover and a lot of people on the payroll.”

But for Mike Byard, at least, the fight isn’t over.

“I love inviting people to my table and them having an experience they’ve never had before and then they come back and they bring their friends, and their friends come back and bring their friends.

“I love my restaurant. I love it to pieces. And I’ll keep doing whatever I can to keep it alive until, you know, someone drags it from my hands.”

This article was first published in the print edition of The Saturday Paper on Feb 20, 2021 as "Lockdown but not out".

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Justine Landis-Hanley is a Melbourne-based journalist. Her work has appeared in The New York Times, The Sydney Morning Herald and The Age.