Café and restaurant closures hit record pace
One in eight cafes, restaurants and takeaway outlets shut their doors across Australia in the past year, with industry analysts warning the downturn is far from over.
New figures from credit reporting agency CreditorWatch show 3910 food service businesses closed in the 12 months to July — up from 3639 the previous year and equating to a 12 per cent closure rate, almost double the 6.69 per cent failure rate across the broader economy.
"Put another way: of every 100 cafes and restaurants trading a year ago, 12 are no longer operating," the CreditorWatch report stated.
The figures point to an industry squeezed from multiple directions, with rising operating costs colliding with softer consumer spending on dining out.
Beyond the closures already recorded, CreditorWatch's data suggests further pain is building. Ten per cent of cafes and restaurants are now more than 60 days behind on payments — almost double the national average — while the sector's trade payment default rate has climbed to 1.15 per cent, nearly four times the economy-wide figure and one of the agency's strongest early indicators of looming insolvency.
CreditorWatch chief executive Patrick Coghlan said the default rate was the figure operators and suppliers should be watching most closely.
"A closure rate of one in eight reflects the pressure the sector has already absorbed, but the trade payment default rate is the number worth watching, because it points to what's still ahead," Coghlan said.
"When a sector is defaulting on its suppliers at close to four times the national rate, it suggests a pipeline of stress that hasn't fully worked through."
"Defaults are among the earliest and most reliable signals we have that a business is heading for difficulty."
Coghlan stressed that struggling operators are not necessarily being mismanaged, but are instead bearing the brunt of steep cost increases that have built up over several years.
Hospitality businesses typically run on thin margins, leaving them especially exposed to cost shocks. Award and minimum wages, which cover a large share of hospitality staff, have risen 30.1 per cent since mid-2022, even as general wage growth has tracked closer to 3 per cent annually over the same period. Energy costs have also climbed, while the conflict in the Middle East has pushed up oil prices and freight charges, adding further pressure to input costs such as alcoholic beverages and coffee beans.
"Many of these are well-run operators being squeezed on costs rather than performance," Coghlan said.
"The data suggests the hospitality adjustment has further to run."
Jonathan Jackson, 20th August 2026
