60% of food and beverage business fail within their first 3 years of trading. Running a food and beverage distribution business is not an easy job. With so many things on the to-do list many businesses often get side-tracked working in the business then on the business.
This brings us to the question, why do so many food and beverage businesses fail?
Here are 6 of the main reasons why food and beverage businesses fail and how your business can avoid them.
Top Reasons Behind Rising Australia Cafe Closures
The Australian café scene has always been part of our culture. However, that reality is shifting fast. Over the past few years, Australia cafe closures have surged. As a result, thousands of small operators have shut down permanently.
The Australia cafe industry crisis stems from multiple pressures hitting at once. Inflation has driven up rent costs while wages continue climbing. At the same time, supplier prices have jumped significantly. Meanwhile, customer spending has dropped on the other end. More people are skipping café visits entirely, and others choose cheaper takeaway alternatives instead.
The issue for most owners is not passion but profitability. Running a café today demands more than great coffee and food. You also need strong systems for cost management. Additionally, payment processing must be efficient, and staffing requires careful planning. Without these elements working together, even beloved local cafés face closure.
Australia Cafe Closures and the Future of the Food Industry
The surge in Australia cafe closures signals something bigger. In fact, the entire food industry is undergoing a major shift. As consumer spending contracts, small food and beverage businesses are forced to rethink operations. Consequently, technology and automation have become survival tools rather than optional upgrades.
The future of the Australian food industry depends on adaptation speed. For instance, cafés using digital ordering systems can cut labour costs. Similarly, automated payment processing improves cash flow while efficient supply management reduces waste and overhead. Beyond operational improvements, some operators are exploring new income sources. Catering services provide steadier revenue, and retail coffee sales reach customers at home. Meanwhile, subscription models create predictable monthly income.
Late payments
The biggest challenge to food and beverage businesses is late payments. It takes 23 days on average for a food and beverage business to get paid. No matter what industry you are in, you won’t last very long waiting almost a month for payments. How would you pay your overheads? Or staff costs? The answer is you couldn’t. To be successful, vendors and distributors need to have automatic credit card payments.
Automatic credit card payments offer great benefits for both your business and your customer. Customers want simplicity, offering automatic credit card payments makes your customers transactions fast and simple. The easier it is for them to pay their invoices, the faster you will generate cashflow.
For your business, automatic credit card payments streamline your entire invoicing and receipting process.
- Customer invoices are generated and sent automatically at the correct interval
- The payment is taken automatically at the agreed time
- The payment is automatically allocated and receipted to the correct invoice
- Reduces debtors
Related article: Why Getting Paid on Time is so important for distribution businesses.
Too high overheads
No matter what industry your business is in if you can’t keep your overheads down – you will quickly go out of business! If your business is having trouble paying staff, rent, or products – you could be in some serious trouble.
To minimise the risk of insolvency, you need to frequently assess your overhead costs. You need to know where your business sits and what you can do without. There is no point investing money in areas that are not viable or don’t provide a healthy return. Shop around, look for the best product prices, have a look at different areas you can cut costs, any area where costs can be minimised that doesn’t affect the businesses overall position look at it.
If there is more money going out of your business, then what is coming in you could be another number on that frightening statistic.
Related article: 5 ways to save costs in the food distribution industry.
Not having goals and KPIs
Many vendors and distributors work on “gut feel” and that’s simply not viable. If your business doesn’t implement goals and work towards KPIs you could be risking your future!
It’s so important that your business has defined goals and KPIs that you and your staff want to achieve. Let staff know what is expected, monitor their performance, and make strategic changes to areas that need to be improved.
The greatest benefit of enforcing KPIs is it gives you a clear tangible performance tracker that indicates if your business is operating successfully or if it isn’t. If something isn’t working you can instantly change it, instead of relying on “gut feeling”.
Poor Customer Service
Take care of your customer and they will take care of you. It may be cliché but it’s true. If you don’t fulfil your customers’ needs, they won’t return.
Simple great customer service techniques include:
- Offer Online Ordering options to your customer
- Remind customers if they have missed a regular order
- Cater for all payment options
- Provide electronic POD copies
- Offer the best price!
Related article: How EasyVend helps you retain your customers.
Inefficient use of time
We know how busy food and beverage businesses are on a day-to-day basis, if you find yourself getting caught on one job – another job will suffer and that can’t happen.
To stay on-top of your daily tasks food and beverage businesses need to automate common daily tasks such as Inventory control, invoicing, receipting and delivery management. A way to do this is by using a food and beverage management software. Which brings us to our next point…
Related Article: How to increase your business efficiency.
Not using a management software
On the topic of software, a big mistake many food and beverage businesses make is not investing in a management system. Some distributors may be reluctant to invest in one or think that the process that they have been using for years is the way to go – which simply just doesn’t cut it anymore.
To be successful, you can’t afford to be working in the business. You need to be working on the business and the only way to get time to do that is by using a food and beverage management system. A food and beverage management system automates all common tasks such as inventory control, invoicing, receipting, accounting, payments, and route management.
The benefit of using a management system is it frees you up to focus on growing your business into the future.
About EasyVend
For food vendors and distributors, EasyVend supports and automates every part of your business, freeing you up to grow your sales unlike other ERP systems that are designed more for wholesale suppliers than for distribution businesses like yours.
EasyVend includes all your everyday needs like Inventory Management, Online Ordering, Invoicing, Receipting, Route Management, Automatic Credit Card Payments, Customer Reminders, Xero Integration and so much more.
For a free no-obligation demo of EasyVend contact us today on 1300 473 744 or submit the form below.
Australia Cafe Closures Explained: Challenges & Solutions
No single factor explains why cafés are closing. Instead, several challenges combine to create impossible conditions:
- Rising operating costs: Rent and energy bills have reached record levels
- Staff shortages: The hospitality workforce crisis makes consistent service nearly impossible
- Declining consumer spending: Cost-of-living pressures mean people visit cafés less often
- Weak financial management: Poor budgeting and payment systems drain cash flow quickly
Given these challenges, the path forward requires smarter operations. Automating routine tasks saves critical time, so invoicing and payment collection should run automatically. Likewise, stock control systems prevent waste and theft. Together, these tools create visibility into actual costs and real performance numbers.
As a result, owners gain time to focus on growth instead of paperwork. Furthermore, better data enables faster decisions. Therefore, cafés that prioritise customer experience alongside operational efficiency can still succeed in this market.
FAQs
Why are so many restaurants closing in Australia?
High rent and supplier costs are squeezing margins while consumer spending has dropped sharply. Additionally, most businesses closing lack proper cost control systems. Without efficient operations, profitability vanishes quickly.
Why are so many cafés closing?
The Australia cafe industry crisis combines rising expenses with falling foot traffic. Moreover, late payments disrupt cash flow, and staff shortages create service gaps. On top of that, outdated management methods cannot keep pace with current market demands.
How much money is needed to open a small café in Australia?
Opening costs range from $150,000 to $400,000 based on location and size. You should budget carefully for equipment and fit-out expenses, then include licenses and permits in your planning. Finally, set aside working capital for the first six months of operation.