H4511A Restaurants in Australia Industry Report PDF

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INDUSTRY REPORT H4511A

Restaurants in Australia Failure to lunch: COVID-19 restrictions are taking away industry growth opportunities Matthew Barry | April 2020

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Restaurants in Australia

April 2020

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Contents ABOUT THIS INDUSTRY..................................3

COMPETITIVE LANDSCAPE.......................... 24

COVID-19 (Coronavirus) Impact Update........................... 3 Industry Definition............................................................ 3 Supply Chain..................................................................... 3 Major Players.................................................................... 3 Main Activities.................................................................. 3 Similar Industries.............................................................. 4 Related International Industries........................................ 4

Market Share Concentration........................................... 24 Key Success Factors...................................................... 24 Cost Structure Benchmarks...........................................25 Basis of Competition...................................................... 26 Barriers to Entry.............................................................. 27 Industry Globalization..................................................... 27

AT A GLANCE...................................................6

MAJOR COMPANIES......................................29 Major Players.................................................................. 29

Key Statistics Snapshot.................................................... 6 Key Trends........................................................................ 6 SWOT in the Industry........................................................ 6 Executive Summary.......................................................... 6 Industry Structure............................................................. 7 Key Industry Data..............................................................8 Products & Services Segmentation.................................. 9

INDUSTRY PERFORMANCE...........................10 Key External Drivers........................................................ 10 Industry Performance..................................................... 11 Industry Data Timeseries................................................13

INDUSTRY OUTLOOK................................... 14 Revenue Outlook.............................................................15 Industry Life Cycle.......................................................... 15 Products & Services Segmentation................................ 17 Supply Chain................................................................... 17 Products & Services........................................................17 Demand Determinants.................................................... 20 Major Markets................................................................ 21 International Trade......................................................... 23 Business Locations........................................................ 23

OPERATING CONDITIONS........................... 30 Capital Intensity.............................................................. 30 Technology & Systems................................................... 31 Technology & Systems................................................... 32 Revenue Volatility........................................................... 32 Regulation & Policy......................................................... 33 Industry Assistance........................................................ 34

KEY STATISTICS.............................................35 Industry Data.................................................................. 35 Annual Change............................................................... 35 Key Ratios....................................................................... 35 Additional Resources......................................................36 Industry Jargon...............................................................36 Glossary..........................................................................36

Legend Icons are used throughout the report to indicate impact on the industry. Negative impact Neutral impact Positive impact

Restaurants in Australia

April 2020

About This Industry COVID-19 (Coronavirus) Impact Update

IBISWorld's analysts constantly monitor the industry impacts of current events in real-time – here is an update of how this industry is likely to be impacted as a result of the global COVID-19 pandemic: • Revenue for the Restaurants industry has been adjusted from 0.3% to 25.1% decline in 2019-20, due to the strict COVID-19 restrictions in place for restaurants. For more detail, please see the Current Performance chapter. • The outbreak of COVID-19 is expected to affect some restaurants more than others. Restaurants that have a greater focus on takeaway options are expected to be less affected as they will online platforms, such as Uber Eats, integrated into their business model. For more details on the affects on service segments, please refer to the Product and Services chapter. • Industry profit margins are expected to be squeezed due to COVID-19. Many operators will have to temporarily close over this lockdown period to minimise operating costs. Fixed operating costs are expected to mount, while revenue significantly declines in the current year. This will put downward pressure on profit margins in the current year. For more detail, please refer to Cost Structure Benchmarks chapter. • In March 2020, the Federal Government has placed restrictions on non-essential business activity, as wel as banned foreign travellers from entering Australia. The restrictions have limited restaurants to takeaway only, which is expected to constrain industry revenue. Inbound tourist numbers are expected to significantly decline due to the ban in the current year, putting further pressure on industry revenue. Note: IBISWorld is endeavouring to update this report in-full as soon as possible. We thank you for your patience.

Industry Definition

Industry firms mainly provide food and beverages for consumption on the premises. The industry includes licensed, unlicensed and BYO restaurants. The industry excludes cafes and coffee shops, theatre restaurants, catering services and shops that primarily offer takeaway food services.

Supply Chain

Supply Industries Meat, Poultry and Smallgoods Wholesaling

Demand Industries -

Consumers

Dairy Produce Wholesaling Fish and Seafood Wholesaling Fruit and Vegetable Wholesaling Soft Drink and Pre-Packaged Food Wholesaling Liquor Wholesaling

Major Players

There are no major players in this industry

Main Activities

The primary activities of this industry are: Restaurant operation Bistro operation Brasserie operation Grill bar operation Sushi and sashimi restaurant operation The major products and services in this industry are: Premium dining Mid-range dining

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Restaurants in Australia

April 2020 Low-cost dining

Similar Industries

H4520 - Pubs, Bars and Nightclubs in Australia Establishments in this industry sell alcoholic beverages for consumption either on the premises (e.g. bars) or off the premises (e.g. drive-through bottle shops). H4513 - Catering Services in Australia Companies in this industry provide catering services at specified locations or events. Meals and snacks may be transported or prepared and served on or off the premises, as required by the customer. H4512 - Fast Food and Takeaway Food Services in Australia Firms in this industry provide fast food, such as burgers, pizzas, sandwiches and sushi, and takeaway for immediate consumption. Customers order or select items and pay before eating. H4511b - Cafes and Coffee Shops in Australia Cafes and coffee shops serve food and beverages for customers on the premises.

Related International 72211a - Chain Restaurants in the US Industries

The industry consists of chain and franchised restaurants that provide food services to patrons that order and are served while seated (i.e. wait service) and pay after eating. These establishments may provide this type of food service to patrons in combination with alcoholic and other beverages. 72211b - Single Location Full-Service Restaurants in the US This industry includes single-location, independent or family-operated restaurants that provide food services to patrons who order and are served while seated (i.e. waiter and waitress service) and pay after eating. These establishments may sell alcohol and other beverages in addition to providing food services to guests. OD4303 - Italian Restaurants The industry includes chain and franchised restaurants that mainly provide Italian-style food, including pizza, to patrons. Restaurants may provide this food service in combination with selling alcoholic and other beverages. This industry does not include restaurants that sell a small portion of Italian food as part of a wider cuisine. OD4305 - Mexican Restaurants This industry is composed of restaurants that primarily serve Mexican-style, including Tex-Mex, food to patrons. It encompasses single-location, chain and franchised enterprises, as well as full-service and fastfood operators. These restaurants also sell alcoholic and other beverages. However, street and food truck vendors are excluded from the industry. OD4308 - Sushi Restaurants The industry is composed of restaurants primarily engaged in providing sushi-style foodstuffs to patrons who order and are served while seated by waitstaff or via conveyor belt-style delivery systems and pay after eating. These establishments may also sell alcoholic and other beverages to patrons. OD4309 - Premium Steak Restaurants The industry includes chain, franchised and single-location restaurants that provide premium steak to consumers. Customers order and are served by waiters or waitresses while seated, and they pay after eating. These establishments may provide food services in combination with selling alcoholic and other beverages. OD4312 - Buffet Restaurants This industry comprises chain and franchised restaurants with buffet-style services where patrons pay, serve themselves and eat within the restaurant. These establishments may also sell alcoholic and other beverages. This industry does not include buffet-style food service contractors, which are included in IBISWorld reports 72231 and 72232. OD4320 - Pizza Restaurants This industry is composed of establishments that prepare and serve pizza and other related items. The industry includes both full-service restaurants and quick-service establishments. OD5337 - Korean Restaurants This industry includes restaurants that prepare and serve Korean food and offer table (waiter) service.

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Restaurants in Australia

April 2020 Food can be prepared to either be eaten on the premises at restaurant locations or for take-out. 6710 - Full-Service Restaurants in China Full-service restaurants in China provide food services to patrons who order and are served while seated and pay after eating (i.e. table service). Food provided by businesses in this industry include a large variety of Chinese cuisine as well as foreign cuisine. I56.101 - Full-Service Restaurants in the UK This industry is composed of sit-down restaurants where customers are served while seated or serve themselves at a kiosk. This industry includes both licensed and unlicensed restaurants, but not cafes and takeaway establishments. 72211CA - Full-Service Restaurants in Canada This industry includes restaurants that provide food services to patrons who order and are served while seated (i.e. waiter or waitress service) and pay after eating. These establishments may provide this type of food service to patrons in combination with selling alcoholic and other beverages. H4511NZ - Cafes and Restaurants in New Zealand Industry firms mainly serve food and beverages for consumption on the premises. Customers generally order and are served while seated and pay after eating. The industry includes cafes and coffee shops, and licensed, unlicensed and BYO restaurants. Catering services, takeaway food services, theatre restaurants and pubs are excluded from the industry. I56.100IE - Restaurants and Takeaways in Ireland Industry firms provide food for consumption on or off the premises. Included in this industry are fullservice restaurants, fast-food restaurants and establishments selling prepared takeaway meals. Cafes selling cold snacks, and pubs are excluded from the industry.

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Restaurants in Australia

April 2020

At a Glance Key Statistics Snapshot

Key Trends

Total Revenue 2020

Annual Growth 2015-2020

Annual Growth 2020-2025

$15.0bn

-4.1%

5.9%

Profit Margin 2020

Wages as a share of Revenue 2020

Number of Businesses 2015-2020

2.1%

31.6%

1.6%

Consumers have changed their dining behaviour to favour cheaper mid-tier options Changing consumer behaviour has driven many operators to restructure their restaurants The outbreak of COVID-19 has caused demand to fall significantly in the current year Consumers' ongoing search for fashionable venues will likely support industry revenue growth Industry profit margins are expected to recover from the outbreak of COVID-19 Industry operators will continue to move towards casual employment to increase flexibility

SWOT in the Industry Strengths

Weaknesses

Low Imports

Low & Steady Barriers to High Revenue Growth Entry (2020-2025)

Very Low Revenue Growth (2005-2020)

Low & Steady Level of Assistance

Low Revenue Growth (2015-2020)

Low Customer Class Concentration Low Capital Requirements

High Competition Low Profit vs. Sector Average

Opportunities

Demand from fast food and takeaway food services

Threats

Low Performance Drivers Real household discretionary income

High Product/Service Concentration Low Revenue per Employee

Executive Summary

Changing social trends have supported demand for the Restaurants industry over much of the past five years.

Consumers' busy lifestyles and high workloads have bolstered demand for restaurant meals and takeaway. Restaurants allow consumers to combine dining with leisure and avoid spending time on food preparation. Increasing demand for food delivery platforms, such as Uber Eats, has boosted industry revenue, allowing time-poor consumers to purchase home-delivered restaurant-quality food. As a result, restaurants have captured a greater proportion of consumer demand from external competitors, such as the Fast Food and Takeaway Food Services industry. However, the COVID-19 outbreak has led to significant restrictions for the industry in 2019-20, and caused consumer sentiment to fall due to fears of a global economic downturn. Overall, industry revenue is expected to decline at an annualised 4.1% over the five years through 2019-20, to $15.0 billion. Profit is expected to decline over the same period, due to mounting fixed costs and a significantly drop in demand in the current year.

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Restaurants in Australia

April 2020 In March 2020, the Federal Government placed restrictions on non-essential businesses, limiting restaurants to takeaway services only. Furthermore, foreign travellers have been banned from entering Australia over the outbreak period. This factor is expected to significantly decrease inbound tourist numbers in the current year, constraining demand for restaurants. Many restaurants are expected to go into hibernation to minimise losses over the lockdown period. As a result, industry revenue is anticipated to decline by 25.1% in the current year. Industry revenue and profit are expected to recover over the next five years, as the COVID-19 outbreak eases and the government lifts restrictions in 2020-21. Rising discretionary income and growing consumer demand for quality food options are projected to support industry revenue growth over the period. However, restaurants are anticipated to face tough competition as other hospitality operators, such as fas food retailers, try to capitalise on the popularity of eating out. Pubs, cafes and prepared meals from supermarkets also represent potential competitive threats to the industry. Industry operators will likely focus on operating efficiencies to limit costs and maintain profitability over the next five years. Overall, industry revenue is forecast to rise at an annualised 5.9% over the five years through 2024-25, to $20.0 billion.

Industry Structure

Level Life Cycle Revenue Volatility

Mature Medium

Capital Intensity

Low

Industry Assistance

Low

Concentration Level

Low

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Trend

Level Regulation Level

Medium

Trend Steady

Technology Change

Low

Barriers to Entry

Low

Steady

Low

Steady

High

Increasing

Steady Industry Globalization Competition Level

7

Restaurants in Australia

April 2020

Key Industry Data

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Restaurants in Australia

April 2020

Products & Services Segmentation

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Restaurants in Australia

April 2020

Industry Performance Key External Drivers

Demand from fast food and takeaway food services Fast food represents a major and growing source of competition for restaurants. Because people are generally leading busier lifestyles, fast food offers an affordable and convenient alternative to dining out. Rising demand for fast food can place downward pressure on demand for restaurants. Demand from fast food and takeaway food services is expected to decline in 2019-20. Health consciousness Consumers are becoming increasingly aware of the health issues associated with poor diets and obesity. This trend is reducing demand for the unhealthy food and drink products provided by many competitors operating fast food chains. Rising health consciousness gives restaurants an opportunity to generate higher revenue by providing healthy options. Health consciousness is expected to increase in 2019-20. Real household discretionary income Changes in household discretionary income affect industry demand. Dining out at restaurants is considered discretionary, so an increase in household incomes tends to boost demand for ind...