The journey from where we came . . .

An overview of 40 years of changes in our industry, and what drove those changes.

Having been involved in the hospitality industry for 50 years now, I’m in an interesting position to view industry development with some perspective. Things have certainly changed over this time, and a summary of where we’ve been may help you see where we’re all headed.

When I first became aware of the industry in the early 60’s we had just exited a long period where the majority of restaurants were either based on Anglo, French or Chinese cuisines and most were quite small, typically 30 – 40 seats. There were many more pubs than we have today, most of them quite small featuring a public bar, lounge bar and a small number of accommodation rooms upstairs, which provided lodging for travellers and commercial reps.

Post war migration changed the industry

Australia actively sought European migration after WW2.

Change came rapidly with post war migration into the country, mainly from Southern Europe, particularly Italy and Greece. I still remember my delight at encountering pizza and pasta for the first time, and strange ingredients like zucchini, eggplant and olives. New migrants found that family restaurant businesses were relatively easy to establish and each new wave from different geographic region moved-in to the cheap ‘n cheerful bottom level and pushed their predecessors up-market.

We revelled in the new accommodation options that came with the establishment of boxy, US style motels which ideally suited the mobility which came with the availability of cheap family cars. In our larger cities high rise international hotels started to appear and overseas tourism increased popularity as airfares rapidly dropped. We also started to see more and more nightclubs and live music venues, as pubs sought to replace revenue lost from their declining share of the accommodation sector.

Coffee culture and fast food

The Europeans brought good coffee with them, and the coffee culture spread-out slowly from a few ethnic enclaves into the suburbs, and at the same time European patisseries started to appear. The coffee and patisseries slowly merged and evolved into the café culture we see nearly everywhere today.

The big fast food companies moved-in in the late 60’s and rapidly began to compete strongly with pubs, restaurants and cafes. The public began to be spoiled for choice, and increased competition held prices down. Profit margins started to decline as ingredient prices and the cost of labour climbed, while prices fell behind inflation.

Coffee culture came with European migrants

Migration shifted from Europe to Asia

Asian migration followed the Europeans

To add to the competition, migration shifted from Europe to SE Asia in the 70’s and we started to see Malay, Thai, Vietnamese and Indonesian cuisines appear. Each successive wave of migration saw the previous migrants pushed-up market. These businesses were often family staffed and were able to offer very good value for money as a result of cheaper cost structures, which then placed further pressure on pricing the rest of the industry.

As margins declined, hospitality businesses needed to become larger and larger in order to gain economy of scale and retain profitability. Large multi-faceted pubs with gaming subsidising food and beverage sprang-up and the viable size of restaurants and cafes started to climb. Small suburban restaurant businesses became expensive to establish with competitive décor and harder and harder to run profitably.

The rise of groups

In the early 90’s we started to see a rapid increase in the number of restaurant, pub and café groups, as astute operators realised that costs could be contained by operating centralised purchasing, marketing and administration. The change from predominantly independent businesses to group operations forced a marked change in management practices as the increased size of 

As margins declined businesses were grouped together for economic efficiency.

businesses required proper company management structures and control systems, rather than the old style ‘benevolent dictatorship’ style of management that is suitable for small, single location businesses only.

Print media and TV drives many new entrants into the industry

Shows like MKR and Masterchef have driven many new entrants to the industry

Relatively recent media focus on food and restaurants has caused an explosion of new entrants into the industry and this has further diluted the available customer base to the point where value for money and high operating standards are now mandatory for success. This has, in turn, radically increased the skill levels required from hospitality managers and chefs at a time when skilled staff are harder and harder to find, and more and more expensive. To give you an example of how this has changed things from my perspective, we are now training supervisors to the same standard as we used to train managers 15 years ago.

Only the well-managed will survive

We have reached the point where if you try to run a hospitality business without sophisticated systems of staff recruitment, training, leadership, cost control, sales and marketing; you will be lucky to survive and may find that you have bought yourself a poorly paid job with unconscionable working hours. We now mentally divide the industry into ‘movers’ and ‘museums’, depending on their willingness to adapt to a rapidly changing economic landscape.

To learn more about the topics discussed in this article please consider the following courses,

For documentation to support the management systems discussed in this article, please visit our resources website.

If you are not sure where to start, contact us now to speak with a consultant.

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