Melbourne’s hospitality scene is bracing for a wave of iconic venues to shut their doors in coming months as “beaten down and broken” business owners finally throw in the towel, industry leaders have warned.
Earlier this week, two CBD institutions – Bar Americano and Pentolina – announced they were shutting their doors.
Both venues told fans on social media they had been unable to renew their leases.
The hole-in-the-wall cocktail bar on Presgrave Place and the Little Collins Street pasta restaurant join scores of other high-profile venues to shut their doors since the start of the pandemic.
They include Bar Saracen, Dandelion, 5 & Dime bagels, Charcoal Lane, Kinfolk, Ezard, Gertrude Street Enoteca, Golda, Annam, Dinner by Heston, Elyros, French Saloon, Gontran Cherrier, Kirk’s Public Bar, Miss Ruben, Lentil as Anything, Fatto, Mess Hall, Degraves Espresso, Cuckoo and Pacific BBQ House, according to a tally compiled by The Age earlier this year.
“There are just so many sad stories at the moment, we’re seeing in mostly in the CBDs but definitely down in Victoria,” Belinda Clarke, newly appointed chief executive of the Restaurant & Catering Industry Association, told news.com.au.
“There are so many businesses who are struggling, particularly with the leasing and tenancy side, we’ve put in a new hotline [to help] — no one is more scary than your landlord.”
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After two years of Covid disruptions and lockdowns, labour shortages, soaring food and energy costs and work-from-home decimating CBD traffic, Ms Clarke said lease renewals were proving the “final straw” for many business owners.
Rising interest rates are forcing many landlords to jack up their rents.
“A lot of the time landlords have their mortgages increasing and they’re having to put in quite substantial increases, and the businesses just aren’t able to commit to that,” Ms Clarke said.
“There’s just a fear in the market signing onto a five or ten-year lease. They’re looking at, what are we doing? Do we need to downscale, do we have to close? Everyone’s pretty beaten down and broken.”
Announcing Bar Americano’s closure on Instagram this week, owner Matt Bax said he “survived 11 years in Pelgrave but I didn’t survive a new landlord”.
“Times are changing and Melbourne needs to get its s**t together, we’re losing the heart of what made it so great,” he wrote.
“My heart aches for small businesses like this that cannot win against landlords and developers.”
It had been reported that the building in which Bar Americano operates was bought in April by a company owned by George Sykiotis, once a partner in George Calombaris’ restaurants.
Pentolina’s owners similarly said they had been unable to come to an agreement with their new landlords.
“It breaks our hearts to inform you that we’ll be closing the doors to our little Collins Street pasta haven at Christmas,” they wrote.
“Needless to say we’re devastated, and we’re exploring alternative options for keeping the Pentolina spirit alive in another location.”
Ms Clarke said the environment was “definitely worse since the lockdowns” as there was no financial support, and more importantly, due to the disruption caused by working from home.
“You can’t plan when people are coming to work in the CBD,” she said, describing it as a “roulette wheel”.
“You prep up, staff up, and nobody goes to work. Another day they’ll do the same thing and it’s really busy, they run out of food, people complain. It’s causing a huge amount of issues because no one can plan an understand what the week will look like. There are so many variables, one small thing changes and it’s going to cost that business a lot of money for opening, when another day it was worth opening.”
She warned while flexible work was “everyone’s excuse to put your trackies on and stay home”, it meant the once-bustling Melbourne CBD — already awash with for lease signs — would soon look like a ghost town.
Research released by the Property Council last month found Melbourne office occupancy rates still well below other cities in August — 39 per cent, compared with 53 per cent in Sydney, 57 per cent in Brisbane, 64 per cent in Canberra, 69 per cent in Perth and 71 per cent in Adelaide.
“It’s fair to say Melbourne’s occupancy at 39 per cent remains a concern, but you would hope that starts to lift again as the months get warmer,” Property Council chief executive Ken Morrison said.
Ms Clarke said while businesses had been closing all throughout Covid, it had grown more noticeable in the last few months because now it was “your iconic businesses, the ones everyone knows and recognises”.
“I think we will probably see quite a few business closures, particularly in the next few months,” she said.
“Businesses are going to have to make a choice — they don’t have enough staff, they’re working 100 hours, additional costs for produce, energy, rent is kind of the final straw. We will see more closures, 100 per cent.”
It’s not all doom and gloom in the city.
Chrissie Maus, director of the Chapel Street Precinct Association, said the popular strip — which runs from the Yarra River to Dandenong Road through South Yarra, Windsor and Prahran — had actually seen a “very buoyant” Covid recovery.
“In fact I would call it a resurgence,” she said.
“We are so happy to see Friday and Saturday nights busier than ever — just like the good old days.”
Ms Maus said unlike the CBD, which is suffering from the effects of people working from home, Chapel Street was “benefited by a thriving local community of residents who now use the strip as a lifestyle precinct”.
“Not only do we have fabulous retail and dining experiences, but we have also so many gymnasiums, health centres, beauticians, hairdressers and other important services that people need to live,” she said.
“We are also buoyed by the fact there has been a spike in cafes and restaurants opening in the last six months. Chapel Street always has a big bounce during spring time as people get excited for the upcoming racing carnival season, Christmas shopping and office Christmas party celebrations.”
For hospitality operators in the CBD, however, the Restaurant & Catering Industry Association is calling for urgent action to encourage workers back to the office.
The state government only lifted its general work from home recommendation last month.
“With spring now here and case numbers and hospitalisations declining significantly, more people may want to get back into the office – and back out to the cafes, shops and bars in busy professional precincts across the state,” Health Minister Mary-Anne Thomas said.
Ms Clarke said more needed to be done.
“We need to be communicating that return back to the CBD and offices, [thinking of] ways we can make that easier — free parking, transport — what can we do to make it appealing for people to go back to work,” she said.
“That needs to be a directive from the government.”