Starbucks may not be the last casualty of the economic slowdown on the Australian Capital Territory's food and catering scene, according to an expert.
The coffee chain is closing 61 outlets across the country blaming challenges unique to the Australian market. All four Starbucks branches in Canberra will close from Sunday with the loss of about 50 jobs.
Fiona Wright from the ACT Restaurant and Catering Association says Starbucks will not be the only cafe to close its doors. "Unfortunately it won't be the only one and it won't be the only one in this town," she said. Wright says people are spending less on eating out as petrol and grocery prices rise.
"The cafe industry in the ACT is doing it tough like a lot of other places," she said.
"Unfortunately because, even though people will see full cafes and restaurants, you have to be full 80% of the time to make money, just to break even. "
Because people will no longer be buying the two courses, they'll buy one course. They will no longer buy two bottles of wine, they'll buy one. Or they won't go at all. "We will weather the storm. It does shake the tree a lot and we will find that a lot of people, unfortunately, who just can't hang on any longer will close." FOODWEEK
The band room at The Prince of Wales last night was swathed in coloured light and packed to the gills with a polite crowd of enthusiastic punters. Fashions ranged from skinny jeans and hoodies to carefully reconstructed looks from eighties B grade movies.
By the end of the night the smartly pressed, button down collar shirts of the Ivy League Collegiate boys in the headline act, were stained heavily with sweat. After bouncing around in his seat like a pinball ricocheting in percussion, the lanky drummer had draped his long body over his kit, but the keyboard player - a baby faced Robert Smith look-alike sans make up - seemed composed and detached. His touch had added joyful piped arpeggios to a Soweto sound, adapted to tales of NYC, that saw the audience singing along in full voice the whole way to their adored grinning musicians.
The crowd around me were largely in their late teens and early twenties, full of enthusiasm for their new found adult lives ahead. Earlier in the night, the local support band they had cheered on enthusiastically, had looked young enough to have mum waiting in the Tarago at the stage door. But these young guys had startled me with their original take on songs that borrowed heavily from the Easybeats and the Beach Boys.
How was it that suddenly kids were connecting to these joyful clean-cut retro sounds that had been abandoned since grunge and doof-doof had cut an aggressive swathe through popular music? I have to admit that I was happily gob-smacked. As I walked through the dark streets of St.Kilda afterwards, I came away with no doubt that we are entering a new wave of clean cut optimism and new values, led by youth who are yet to be classified by researchers as to whether they are Gen Y or Z. Personally I think they deserve a better title.
So we come to the article above, referring to the ACT, and although the issues described are not confined to our Capital Territory we seem faced with doom and gloom, not joy. The Starbucks angle has been milked for easy sledging in the tabloid press here and even in the UK, The Guardian and its blog have explored the Aussies Vs Starbucks theme - and well, it's old news now. The interesting part of this particular piece of prose that I've quoted is the acknowledgement of what lies ahead for both the hospitality industry and the punter.
The R word - recession - is being avoided as much as possible but in real terms, the average Australian has already been subjected to significant economic change. According to AMP capital, the average Aussie family now has $95 a week less to spend than this time last year with three quarters of that amount going towards increased mortgage payments.
The impact of this shift has resulted in less money to spend on the family and less work manifested by the effects of an economic downturn that has come from the fall out of the American Credit Crunch and unstable stock market. Bring to the table higher interest rates, the increase in Fuel prices and the global food shortage.
In order to gain that ground, people are having to relinquish certain 'nice to haves'. Starbucks was one of these little indulgences, but sales of all convenience food will to some degree be affected. The next businesses to be affected will be food retailers. Naturally - and sadly - this is going to spell trouble for a great many mid-sized businesses and chain stores, but it will also be felt by caterers, reception centres, dining venues and bars.
While the City of Sydney Council is now offering grants of up to $30,000 to businesses hoping to open copycat Melbourne-style hole-in-the-wall, lane way venues, I have to wonder how many of them will stay afloat in the coming economic downturn?
In order for hospitality venues to survive by being full 80% of the time, the business model for many of them will need to change in order for them to survive in Australia's tiny market. Many will drop out of the equation or be forced to evolve and to create a different kind of offering which will still attract spend when the discretionary dollar has dwindled.
Amidst the pessimistic economic forecasts that I've been reading, in my professional practice I am hearing more about certain positives and the creative approach that some consumers are taking to their new circumstances. In some cases a holistic approach is evolving which also takes in fresh approaches to the issues besieging average consumers.
One strong positive in gastronomic quarters is the rising numbers of Aussies looking to find good, fresh locally produced nutritional produce and where to get it on a budget - rather than fall back on junk food because it is cheap and easy.
This is pushing social change forward, along with a drive from increasing numbers of parents who are worried about what they are feeding their children. More people than anticipated are endeavouring to counter the rise in childhood food allergies and behavioural disorders exacerbated by poor diet and food additives, so are looking for cost effective alternatives. And I'm not talking solely about comfortably well off, white collar Australia.
This is a strong trend in sectors of blue collar Australia too. You could put it down to Oprah, Women's magazines, celebrity chefs, or even the Internet. But I feel it is emerging because women in particular are genuinely looking for better alternatives for their children's health.
And then there is the growing group who have less money to go around and just want to know where to get restaurant style produce to enjoy in their own kitchens, without suffering the expense of dining out at the more mediocre, moderately priced venues. Add to that the finding that many more people now want to know how to cook like Granny did and they want fresh food that has innate flavour and more nutrients, just like it used to be. Nice.
These consumers are even leaning more towards growing some of their own produce. This is benefiting nurseries, seed producers and raisers of heritage vegetables. As a consequence of the increased market interest in better produce, sales of organic farm-gate produce have lifted 80% with the Australian market is now worth over $230million and showing significant growth.
Meanwhile supermarkets are feeling the negative effect of shoppers voting with their feet in the wake of this new wave, as their customers realise that although supermarket organics are a better alternative to what they have been eating, they are more costly and less fresh than farm-gate sourced food.
Something that has also lifted my optimism have been the reports about Celebrity Fatigue. This is used to describe a cycle where the spoilt young entertainers that fill the trash magazines are becoming irrelevant to young consumers. The new consumers have a global awareness, concern for the environment and their futures, which manifests as wanting to recycle everything down to building materials, furniture and clothes, to discovering Freecycle as an alternative to eBay. I suspect that I was surrounded by a number of them last night.
These people are abhorrent of waste, branding and obvious consumerism. They're immune to advertising - much to the frustration of traditional marketers whether in selling an item, a service or a venue - because these people are taking a holistic approach to their lives, making choices that are not influenced by branding and traditional hype. Instead of feeling that they're being shouted at by the media, they're thinking for themselves.
They prefer word of mouth and personal recommendation to advertising campaigns, traditional 'Best Of' guides or keeping up with the Jones'. They discern by processing media communications, particularly online and respond enthusiastically to spontaneity. I'm excited by their eclectic approach to life and particularly their passion for redressing the damage done to society and the planet by boom era excesses. And you know what, they're not all generation X, Y and Z, some are definitely older.
As they too feel the economic pinch, they're returning to recreating home comforts. One aspect of that is looking to learn how to cook the basic dishes again as they are forced to reconsider convenience food. This movement is also giving rise to a new wave of Crafting and the reawakening of traditional artisanal skills across the board.
In my 'cool-hunting' aka trendspotting, I'm now hearing more about co-ops whether food oriented and devised to bring farm food direct to the consumer, or as services exchanged within a particular community for other useful tasks. The words 'Working Bee' have recently made a big comeback too, as people pool their resources - and shared community cars are now made available to urban dwellers. The Mountain Goat and Little Creatures Breweries have incentivised their staff to ride bicycles to work, with the latter having purchased 20 bikes specifically for this.
This turn in mindset is bringing us back to old values. Possibly even war era values. Economic downturn forces people to be creative and to co-operate in order to survive. In the coming era, we may not necessarily have the freedom to go for what is convenient. Instead most will be challenged to make better lifestyle choices. And to me that's another positive.
On the topic of economy and turning away from popular culture, my post about the $90 roast chicken meal seemed to resonate with a number of people. Thank you to those who commented or contacted me via email. It was refreshing to hear how the Internet savvy public are reacting.
While some go on as they always have, there are significantly more who are quietly emerging as early adopters - without flagging a particular handle - of being pro cause such as Slow Food or Locavores. In fact perhaps to some degree as these themes move slowly into the mainstream titles are becoming redundant. What is now key is eating better on a budget.
In the last month more Aussie bloggers with families have concentrated on posting about simple home cooked fare and less on what's the hot new venue in town. For my part, this will probably also be the case. I've seen the writing on the wall and know what is ahead. The shekels in our pouch will need to stretch much further in order to sure up our future financial goals, so like many others we will mostly be turning inwards for culinary comfort. Our wedding plans are postponed too as a consequence of unrealistically high venue mark-ups versus available funds in this depressed market, but I know we're not alone there.
I'm not crying poor though. After all our household has it pretty bloody good. Compared to the three year old child - pictured above - who we met last year at Angkor Wat where she and a slightly older sister had been deployed by their family to sell postcards to tourists, we are on easy street. And remembering people like her helps to put life in perspective. So, as time ebbs, my priorities are changing. Some pleasures will remain, while others will become dormant. Just as in nature, survival depends on adapting to the seasons, with the optimism of things to come in spring.
In the meantime there will be more entertaining at home and at friend's houses on great produce procured from the farm gate, garden and markets. This will be a time where we establish who our real friends are and enjoy true heart-felt hospitality in convivial surrounds.
As for Starbucks being the first large retail casualty of the economic downturn, it was really no surprise. They followed the McDonald's model of buying the real estate in the USA where their venues were located and made some very poor decisions. Compound that over here with an arrogance that Coffee drinkers who prefer their coffee properly roasted and unfettered by additives that smother the favour, would somehow come around to the brand seem preposterous.
I do feel however for their 685 staff, particularly as they are largely made up by the young and hope that they can find a foothold elsewhere. I feel the same way for the 110 employees of SPC now owned by Coca Cola who have lost their jobs in two hits so far this year and for the 640 from Don Smallgoods - owned by multi-national corporation British Foods - who are losing or have recently lost their livelihoods. Then there are the 200 Arnott's Players Biscuits employees that have been axed by the multinational Campbells Soup company and the 600 at South Pacific who will lose their income when cheaper imports come in from India and China instead. In total it is being flagged that over 2000 people will be let go in the months to come by large companies.
This makes me even more determined to continue to buy locally produced goods and to help my clients push back against the supermarkets and department stores who force the production of Aussie products offshore by screwing manufacturers and farmers on price. Perhaps it will also encourage more Aussies to think twice about who they now support in the marketplace.
The people who do seem to have something to gain at the moment are the simple, low rent, sometimes ethnic grocers, sometimes 'Mom & Pop' stores who are selling cheaper groceries and home grown produce or fresh food from the wholesale markets at lower margins. Also certain well run Farmers Markets are seeing a surge in popularity.
The other group who will gain are those who sell or buy in bulk. I recall as a child my parents spent most of their housekeeping budget split between a place called 'Half Case House' and the rest at The Victoria Market or Asian Grocers. It would seem that those days are coming back as the way for many families to survive when there's less money to go around and if an extended family pool their resources this could may be the best bang for buck they can get under the circumstances.
I'm really taking heart that as we tighten our belts, forecasters suggest that we will witness the 'We' generation taking the lead away from the 'Me' generation. Perhaps this coming societal change in circumstances is also a manifestation of the Confucian philosophy which uses the analogy that water is the most powerful natural medium? For when faced with a blockage in it's path such as rocks, water will find a route over or around it.
By trickling enmasse over the obstacle over time, water gradually causes the right amount of erosion required to create a new path, or if it freezes within a crack it will eventually expand to split the rock wide open. In society - just as in nature - because change seems innate, we probably will barely notice it happening - and once it comes we will take it in our stride. We may even perceive that it was just meant to be or always was. I see hope and positivity in the future.
- They must often change who would be constant in happiness or wisdom.