Restaurants and cafes saw record high closures in 2025
The industry is facing several intense pressures, such as rising costs.
Australia’s cafés and restaurants are facing record-high failure rates, with 10.4% of food service businesses closing over the past year, a report by CreditorWatch revealed.
The report points to intense pressure from a combination of rising operating costs and weakening demand, such as wage increases, input inflation, and rent pressures. Successive minimum wage rises since 2022 have squeezed already‑thin margins, whilst many venues face sharp post-pandemic rent hikes in prime locations.
Food prices rose 7.5% over the past year due to supply chain disruptions and extreme weather, and energy costs have also climbed. With many independents carrying higher debt and limited access to credit following COVID, operators have little buffer to absorb further shocks.
Softening consumer demand is compounding cost pressures. With real wages under strain and interest rates higher, households are cutting discretionary spending. Retail data shows café and restaurant turnover has remained largely flat since early 2023, with Australians dining out less frequently and spending less per visit.
“This is less about a sudden collapse and more about an extended squeeze,” Mr Coghlan said. “Businesses without pricing power, diversified revenue or cash reserves are being exposed, and the pressure has been building for months.” Patrick Coghlan, CEO of CreditorWatch, said.
