Cashflow concerns for hospitality businesses

03 April, 2020 by Andy Young

The Government’s Job Keeper announcement has been largely welcomed as a way to help employers and employees be ready for the other side of the coronavirus crisis.

However, there are some concerns that the relief on offer will not come soon enough to be accessed by many small to medium independent hospitality businesses.

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According to a survey conducted by the Night Time Industries Association (NTIA), in conjunction with the Independent Bars Association, the primary issue is cashflow. Last Monday the government shutdown all hospitality venues, other than for takeaway, and this move came after a bushfire affected summer.

The combination of these factors mean that many businesses in the trade are cash-strapped and will not be able to trade through to May in order to access the Job Keeper payments.

The survey found that while 70 per cent of survey participants were encouraged by the scheme, a staggering 87 per cent of respondents indicated that they did not have sufficient cash to reinstate/keep employees until the Government reimburses in May.

And while the Prime Minister has celebrated the adaptability of Australian businesses and how they have changed trading models, only 38 per cent of businesses surveyed were still trading, and of that, 70 per cent said their current trading costs exceeded their revenue.

NTIA Chair, Michael Rodrigues, told TheShout: “We commend the Government on the intention behind the Job Keeper scheme, but the simple fact is that it assumes businesses are still standing and have adequate cashflow to survive through to May.

“The small to medium independent scene is the cradle of australian hospitality creativity – our award winning bars and restaurants that innovate, inspire, and drive trends that have given rise to an internationally renowned sector.

“It would be a disaster to see this sector unintentionally fall through the cracks of the relief measures Government has tabled.”

Half of all respondents said they would welcome a loan arrangement to help them to apply and implement the Job Keeper initiative for their staff, but there is little confidence in successful applications being made by this cohort under the Morrison government loan guarantee scheme as it currently stands.

Today’s announcement from the NSW Government offering $10,000 grants to small business is also welcomed, however it will not be applicable to many in the sector due to the employee numbers and or even if it is, the quantum of relief and the time taken to access it will not address this issue.