Sydney chicken shop owner reveals tough fight thousands of Aussies face: ‘Really hard'

Yahoo

2 days ago

A Sydney chicken shop owner has opened up about the 'hard' operating conditions facing thousands of Aussie small businesses around the country. Businesses are continuing to battle the rising cost of rent, wages and goods, coupled with still cautious consumer spending.
Joe Avers co-founded Super Nash Brothers, a Nashville-style fried chicken shop, in 2021, which now has three locations in Waitara, Waterloo and Willoughby. While the business has seen sales steadily increase this year, Avers told Yahoo Finance the last two and a half years had been 'really, really hard' for profitability.
'Hospitality in itself is a really difficult industry regardless, but there's just been so many pressures between rising energy costs, increases in wages, increases in ingredients costs and raw materials,' he said.
'On top of rent increases with CPIs and our third-party delivery platforms have been just so and so expensive and getting more and more expensive as time goes on, unfortunately.'
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Avers, who co-founded the business with partners Ross Kempt and Will Kierath, said the chain's June year-on-year revenue had dropped by between 3 to 5 per cent.
'It wasn't an enormous amount, but we historically have always been stronger in winter because we're fried chicken, spicy, hot, comfort food,' he said.
'Because of the growth we saw earlier this year, we were like June, July, August are going to be insane, record months, we're going to be healthy from a business perspective.
'[So] it was interesting to see we didn't have that same jump from May to June as we have in the past.'
Avers said cost-of-living pressures were a factor behind the softer sales. The latest retail spending data found spending in cafes, restaurants and takeaway food services dropped 0.4 per cent in June.
To combat cost-of-living pressures experienced by customers, the business introduced a more wallet-friendly menu about 18 months ago, which are slightly smaller versions of their existing combos at 20 to 30 per cent cheaper prices, and has seen good customer adoption. It's also introduced different deals throughout the week through its loyalty program.
'While we are seeing good sales numbers in terms of the volume of customers coming through, the average sale price has definitely dropped off as a result,' he said.
Operating costs continue to increase
On the operating side, Avers said costs like energy, rent and ingredient costs had been steadily increasing.
'We used to pay $20, $25 for 20 litres of oil, we now pay the equivalent of $85 for 20 litres. So that's gone up almost four times,' he said.
'Every week, there's a new item that goes up. Even if it's just 1, 2, 3 per cent, if it's happening on every product every few months, by the end of the year, the products that we were profitable on previously are pretty much line ball.'
Avers said the business had not increased the price of its products in three years.
'It's something that we've really sort of battled with. We get to a point where there's sort of no money in the bank and we go if we increase this product and this product by $1 each, there'd be an extra $2,000 at the end of the week, which would be a significant improvement for us in our cash flow position,' he said.
'But the challenge that we face is, if we do increase it by $1, how many customers do we potentially have drop off and it's just that last straw for a customer.'
Small businesses facing headwinds across the board
Avers isn't the only small business owner who is experiencing softer sales right now.
New research from Xero found Australian small business sales slowed in the June quarter, recording the slowest growth in sales since 2020.
Sales grew 3 per cent year on year in the June quarter, down from 5.3 per cent in the March quarter and 2.4 per cent in the December quarter and below the long-term average of 7.8 per cent.
Sales were volatile month to month, with the Reserve Bank's rate cuts in February and May appearing to have a short-term positive impact on sales in March and June.
Hospitality sales were softer than the average, rising 1.1 per cent year on year, compared to the average 2 per cent year on year growth seen in the two previous quarters.
Xero economist Louise Southall told Yahoo Finance the slower growth pointed to continued caution around discretionary spending, with many households still tightening their belts on non-essentials like dining out.
'While recent rate cuts and easing inflation have provided some relief, hospitality businesses are also managing high operating costs, labour shortages and shifting consumer sentiment — all of which add to the pressure,' she said.
But business sees 'light at the end of the tunnel'
While sales growth is still below the long-term average and slower than previous quarters, Southall said it was encouraging to see Australian small business sales were continuing to rise.
'Australians who are in a position to do so can support hospitality small businesses by dining at independent venues, buying from local cafés, or leaving a positive review for their favourite spots,' she said.
'Small, everyday choices can make a real difference, helping small businesses remain viable and keeping local communities thriving.'
Avers said he'd encourage customers to order directly from businesses, rather than use third-party delivery services like Uber Eats and DoorDash.
'What most customers don't know is that Uber Eats actually charges like 30 per cent to the restaurant for the total order value, and then on top of that, the customer then pays the delivery fee,' he said.
'That's a service that is great and helpful but they are paying almost twice as much as they would in store for the convenience of that.'
Avers said he was hopeful the business would keep growing and said they weren't planning on closing their doors anytime soon.
In fact, they hope to open another store in the next 12 months and are currently looking at franchising opportunities.
'We believe in our product, our team, our brand, our customers enough. We've been through the worst of it through covid and the highest point of interest rates, we'd like to think that there's light at the end of the tunnel,' Avers said.
'We're definitely going to continue to stick it out'