Industry Report
Food and Beverage Services Industry Report Industry Division Accommodation and Food Services Industry Subdivision Food and Beverage Services Industry Group Cafes, Restaurants and Takeaway Food Services Pubs, Taverns and Bars Clubs (Hospitality) Industry Class Cafes and Restaurants Takeaway Food Services Catering Services Pubs, Taverns and Bars The ANZSIC is a hierarchical classification with four levels, namely Divisions (the broadest level), Subdivisions, Groups and Classes (the finest level). At the Divisional level, the main purpose is to provide a limited number of categories which provide a broad overall picture of the economy and are suitable for the publication of summary tables in official statistics. The Subdivision, Group and Class levels provide increasingly detailed dissections of these categories for the compilation of more specific and detailed statistics. Data referenced in report All data referenced in this report has been updated with the latest available figures when prepared as at October 2015. Figures may vary from previous reports due to revision by providers (ABS, RBA, IBIS, etc.) or updated calculations by CoreData. Data sources used include: ABS: 8165.0 Counts of Australian Businesses, including Entries and Exits, Jun 2010 to Jun 2014 released 02/03/2015 ABS: 8155.0 Australian Industry, 2013-14 released on 29/06/15 ABS: 6291.0.55.003 Labour Force, Australia, Detailed, Quarterly, Aug 2015 released on 17/09/15 ABS: 6427.0 Producer Price Indexes, Australia, Jun 2015 released on 31/07/2015 IBISWorld Reports: Restaurants in Australia Industry Report (Jul 2015) Cafes and Coffee Shops in Australia Industry Report (Jul 2015) Fast Food Services in Australia Industry Report (Jul 2015) Catering Services in Australia Industry Report (May 2015) Pubs, Bars and Nightclubs in Australia Industry Report (Aug 2015) Social Clubs in Australia Industry Report (Jul 2015)
Food and Beverage Services Industry Overview This industry group comprises businesses that provide meals, snacks, and beverages for consumption by customers both on and off-site, including restaurants; cafes and coffee shops; fast food outlets; catering services; pubs, bars and nightclubs; and social clubs. It sits within the larger industry of Accommodation and Food and Beverage Services. The food/beverage and hospitality industry is often assessed in conjunction with the accommodation industry because many of these services are provided by the same businesses. The food and accommodation industries are significant contributors to the Australian economy, providing employment for almost 800,000 Australians, and generating $74 billion in revenue annually. Geographically the industry group is closely aligned to the Australian population, with the largest number of employees and businesses based in NSW, followed closely by Victoria. Industry Revenue (2013 2014) $74.0 billion Number of Food and Beverage Service Workers (June 2014) 792,000 Number of Food and Beverage Services Businesses (June 2014) 72,040 Wages FY2013-14 $18.1 billion Proportion of Food and Beverage businesses that exited market in FY2013/14 15.8% Proportion of businesses with more than $2 million in turnover (June 2014) 8.0% Food and Beverage Services Industry Employment in the Food and Beverage Services industry subdivision has declined by 1.4% between FY2012-13 and FY2013-14, shedding 11,000 jobs. This is on the back of flat growth between FY2012-13 to FY2013-14, and was the first instance of negative growth in the past eight years. The industry division s total income represents 2.4% of all industries, indicating that it plays a smaller role in the economy than is represented by number of workers alone. Total income has increased by 5.2% between FY2012-13 to FY2013-14, reversing the marginal decline in industry revenue from FY2011-12 to FY 2012-13. Profit margins for the industry are consistently lower than the all industry average, with operating profit before tax only 7.9% of total income, compared to 10.9% for the all industries. Food and Beverage Services Employment 1,000 000 Employed 800 600 400 629 646 692 761 772 803 803 792 200 0 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14
Food and Beverage Services Total Income 80.0 $ Billion 60.0 50.4 55.8 55.7 40.0 20.0 0.0 2006-07 2007-08 2008-09 58.7 2009-10 65.7 2010-11 70.4 2011-12 70.3 2012-13 74.0 2013-14 Industry Drivers Real household disposable income Australians have experienced major real wage growth around 4% between 2004 and 2012, allowing for dining out, partying and lunches. However, real wage growth has declined since 2012 through to 2015 to around 2%, limiting Australians ability to spend more on these food and beverage services. Convenience With consumers living increasingly busy lives, demand will be driven by their desire for convenient food and beverages. Cafes are expected to take some market share from restaurants as consumers move away from formal dining, choosing more convenient cafe-style meals and snacks. Health Consumer demand for healthier, premium quality food and beverages will also underpin industry performance. Businesses offering diverse menus with an emphasis on fresh, premium ingredients are expected to perform best as discerning consumers search for better quality. Competition Fierce industry competition, particularly on price, will be the main factor limiting growth. Price increases for restaurant meals and take away and fast foods have moved closer to the CPI (Australia s weighted average price increases), meaning that restaurants and take-away services have less room to add a mark-up to inflation. Food and pop cultures The industry has benefited from a rising food culture. Awareness of fashionable restaurants, cafes and bars is strong and further enhanced via online consumer review sites, such as Urbanspoon. There is also a trend towards high quality, gourmet food, supported by the prevalence of cooking shows, such as Masterchef and My Kitchen Rules.
Producer Price Index Selected Industry Groups (2005 2015) 140.0 120.0 100.0 80.0 60.0 40.0 20.0 0.0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Cafes, restaurants and takeaway food services Accommodation Price Growth Restaurant Meals, Take Away and Fast Foods and Overall Inflation (CPI) (2007 2015) 8.0% 7.0% Restaurant meals Take away and fast foods 6.0% CPI 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% 2007 2008 2009 2010 2011 2012 2013 2014 2015 Annual Real Wage Growth (2005 2015) 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Industry Performance Food and Beverage Services employ almost 800,000 Australians, or roughly 7.4% of the total workforce. The food industry s revenue is expected to grow 1.6% per annum from FY2015/16 to FY2020/21 to $70.6 billion, from its current $65.5 billion. Employment growth has recently reversed. Food and Beverage Services showed steady year-on-year employment growth between 2007/08 and 2011/12, but has seen a modest decline between 2012/13 and 2013/14. The industry divisions total income represents 2.4% of all industries, indicating that it plays a smaller role in the economy than is represented by number of workers alone. Total income has increased steadily since 2009-10, when the effects of the GFC were impacting the industry. Profit margins for the industry are consistently lower than the all industry average, with operating profit before tax only 7.9% of total income, compared to 10.9% for the all industries. Growth in profit margins has remained stagnant since 2010/11. Food and Beverage Services Profit Margin 15.0% 10.0% 5.0% 0.0% 12.0% 7.7% 11.3% 5.0% 2006-07 2007-08 10.4% 7.5% 2008-09 11.5% 2009-10 2010-11 2011-12 2012-13 Please note All Industry includes all industries with the exception of Insurance and Financial Services. 9.6% Food and Beverage Services 12.4% 7.6% 12.1% 7.9% All Industry 10.6% 7.9% 10.9% 7.9% 2013-14 Number of Workers Cafes, Restaurants & Takeaway Food and Beverage Services (August 2015, by State, 000) 200.0 165.7 171.2 2014 2015 147.5 150.0 132.7 116.6 100.2 100.0 50.0 0 NSW VIC QLD 32.3 35.0 SA 53.4 63.2 WA 12.0 10.7 TAS 4.0 5.0 NT 10.7 9.0 ACT
Number of Workers Cafes, Restaurants & Takeaway Food and Beverage Services (2005 2015) 600.0 500.0 400.0 300.0 200.0 100.0 0.0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Cafes and Restaurants & Takeaway Food and Beverage Services in Operation (State, Employees) Operating at the end of FY 2013-14 Non Employing 1-19 Employees 20-199 Employees 200+ Employees Total no. no. no. no. no. New South Wales 4,616 14,516 907 43 20,082 Victoria 4,329 11,867 773 44 17,013 Queensland 2,398 7,526 822 32 10,778 South Australia 864 2,498 204 6 3,571 Western Australia 1,249 3,736 498 14 5,497 Tasmania 207 813 62 3 1,084 Northern Territory 85 278 40 3 404 Australian Capital Territory 195 769 88 7 1,059 Total 13,943 42,003 3,394 152 59,489
Industry Performance: Cafes, Restaurants & Takeaway Food and Beverage Services Cafés, Restaurants, and Takeaway Food and Beverage Services currently employ more than 558,000 workers, an increase of 10,700 since 2014 and reaching a 10-year record. Northern Territory is the standout state for growth with its workforce increasing by 18.3 % and recovering from a 2013-2014 decline. ACT (-15.5%) and Tasmania (-10.9%) have seen a decrease in their food service workforces. By state, the largest proportion of the workforce is in NSW, where 171,200 Food and Beverage Services workers are based. This is followed by Victoria, Queensland and Western Australia. Victoria has the largest number of Café, Restaurant and Takeaway Food and Beverage Services chains with more than 200 employees. Cafes and Restaurants & Takeaway Food and Beverage Services in Operation (State, Turnover) Operating at the end of FY 2013-14 Zero to less than $50k $50k to less than $200k $200k to less than $2m $2m or more Total no. no. no. no. no. New South Wales 1,757 6,004 11,472 849 20,082 Victoria 1,576 5,286 9,487 664 17,013 Queensland 901 2,704 6,546 627 10,778 South Australia 271 981 2,160 159 3,571 Western Australia 419 1,355 3,349 374 5,497 Tasmania 91 281 664 50 1,086 Northern Territory 34 76 262 32 404 Australian Capital Territory 74 239 686 59 1,058 Total 5,123 16,926 34,626 2,814 59,489 Number of Workers Pubs, Taverns & Bars (August 2015, by State, 000) 35.0 31.6 30.0 27.9 25.0 23.7 20.9 20.0 16.9 15.2 15.0 11.5 9.7 9.2 9.3 10.0 2014 2015 5.0 0.0 2.6 3.2 0.5 0.7 0.6 0.6 NSW VIC QLD SA WA TAS NT ACT
Number of Workers Pubs, Taverns & Bars (2004 2015) 120.0 100.0 80.0 60.0 40.0 20.0 0.0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Pubs, Taverns and Bars in Operation (State, Employees) Operating at the end of FY 2013-14 Non Employing 1-19 Employees 20-199 Employees 200+ Employees Total no. no. no. no. no. New South Wales 563 1,058 395 8 2,024 Victoria 386 873 241 3 1,503 Queensland 295 483 236 5 1,019 South Australia 145 314 156 616 Western Australia 163 280 170 614 Tasmania 30 109 35 175 Northern Territory 7 14 24 3 46 Australian Capital Territory 18 35 18 71 Total 1,607 3,166 1,275 19 6,068
Industry Performance: Pubs, Taverns & Bars Pubs, Taverns and Bars currently employ more than 97,000 workers, a 12.3% increase compared to 2014. Employment rates have soared in the past 12 months, increasing by 12.3%. The Northern Territory recorded the highest growth of 53.6%. Western Australia comes second with an annual increase of 23.1%. The number of Pub, Tavern and Bar workers also increased in Tasmania, by 21.2%. The ACT recorded the largest loss, losing 8.3% of its workforce. South Australia was the only other state to see employment loss in this sector, experiencing a decline of 4.9%. By state, the largest proportion of the workforce is in NSW, where 31,600 Pub, Tavern and Bar workers are based. This is followed by Victoria, Queensland and Western Australia. Western Australia overtook South Australia in 2015 due to its strong employment growth. The need to provide customer service over extended hours and for seven days per week means labour costs are the second-biggest expense for operators in the industry. Superannuation, payments to employment agencies for staff and employee insurance are also part of this category. Wages and associated labour costs account for 21.8% of industry revenue. Queensland has the highest proportion of non-employing Pubs, Taverns and Bars. Self-operated establishments account for 28.9% of the total number of Queensland pubs, taverns and bars. Pubs, Taverns and Bars in Operation (State, Turnover) Zero to less than $50k Operating at the end of FY 2013-14 $50k to less than $200k $200k to less than $2m $2m or more Total no. no. no. no. no. New South Wales 170 253 942 659 2,024 Victoria 156 221 834 292 1,503 Queensland 106 130 464 319 1,019 South Australia 52 74 281 209 616 Western Australia 63 78 251 222 614 Tasmania 15 16 105 39 175 Northern Territory 3 4 13 26 46 Australian Capital Territory 5 12 36 18 71 Total 570 788 2,926 1,784 6,068
Industry Outlook Of the selected group of Food and Beverage industry groups*, total revenue is expected to grow by 9.5% from FY2014-15 through to FY2020-21. Of the industry classes, Cafes, Restaurants & Takeaway Food and Beverage Services is expected grow by 10.3% over the next five years, with revenue increasing from $31.6 billion to $34.8 billion in FY2020-21. Within this industry group Restaurants and Cafes are likely to drive growth, largely due to Australia s continued and growing love for quality coffee, and quality food. However, Takeaway Food is not likely to perform as well, due to increased focus on health impacting the industry. The Pubs, Bars and Nightclubs industry group is expected to grow by 8.1% in the five years to FY2020-21, with revenue growing from $16.8 billion to $17.9 billion. The industry is facing challenges from increased regulation of gaming facilities and a trend of falling beer consumption. On the other hand, industry drivers can be found in trend toward opening small bars, especially in Sydney and Perth. *Based on projected and actual revenues for the following food services industries: restaurants; cafes and coffee shops; fast food services; social clubs; catering services; pubs, bars and nightclubs. Projected and Actual Industry Group Revenue ($million) Cafes, Restaurants & Takeaway Food and Beverage Services Pubs, Bars and Nightclubs Total Selected Industry groups 2006-07 24,586 14,372 38,958 2007-08 24,743 14,692 39,435 2008-09 23,963 14,572 38,535 2009-10 26,955 14,740 41,695 2010-11 26,627 14,843 41,470 2011-12 27,046 15,209 42,255 2012-13 28,502 15,654 44,156 2013-14 29,722 16,116 45,838 2014-15 31,556 16,587 48,143 2015-16 32,146 16,759 48,905 2016-17 32,609 17,010 49,619 2017-18 32,291 17,217 49,508 2018-19 33,092 17,506 50,598 2019-20 34,096 17,680 51,776 2020-21 34,795 17,925 52,719 Source: IBISWorld Based in part on Bankwest Economic Updates, Australian Bureau of Statistics data used pursuant to the Creative Commons Attribution 2.5 Australia license (available online at: http://creativecommons.org/licenses/by/2.5/au/) and the following H4511A Restaurants in Australia Industry Report (Jul 2015), H4511B Cafes and Coffee Shops in Australia Industry Report (Jul 2015), H4512 Fast Food Services in Australia Industry Report (Jul 2015), H4513 Catering Services in Australia Industry Report (May 2015), H4520 Pubs, Bars and Nightclubs in Australia Industry Report (Aug 2015), H4530 Social Clubs in Australia Industry Report (Jul 2015). π 13 7000 µ bankwest.com.au/business The information contained in this publication is of a general nature and is not intended to be nor should it be considered as professional advice. You should not act on the basis of anything contained in this publication without first obtaining specific professional advice. To the extent permitted by law, Bankwest, a division of Commonwealth Bank of Australia ABN 48 123 123 124 AFSL/Australian credit licence 234945, its related bodies corporate, employees and contractors accepts no liability or responsibility to any persons for any loss which may be incurred or suffered as a result of acting on or refraining from acting as a result of anything contained in this publication. BWA-41770 121115 - FS