Australia’s hospitality industry struggling with cost of living

Adam Theobald, Founder of Ordermentum

Australia’s largest wholesale online order management platform for food and beverage, Ordermentum, has made intensive research and outsourced data to reveal how the current cost of living crisis is affecting the hospitality industry, and the Australian economy as a whole.

This research and data comes from analysing the spending habits of 36,000 Australian cafes, bars and restaurants, and the 650 suppliers that already use Ordermentum to purchase and sell baked goods, coffee, fruit and vegetables, seafood, poultry, packaging and more.

What did the data obtained by Ordermentum reveal?

The data by Ordermentum revealed that supplier prices for goods have increased by 20% since 2020 – a figure that has increased due to inflation and rising interest rates prevalent in the economy. The data also showed that we are not yet back to the pre-pandemic trading levels, however, there was a substantial increase in spending habits in the last few months.

“As the largest food and beverage platform in Australia, our data can be seen as a key indicator of the current Aussie economy. We’ve sifted through and analyzed about $2 billion worth of transactions to understand the economy’s fundamental signs which led to the realization that expenditure is significantly 20% more,” said Adam Theobald, Founder of Ordermentum.

“It shows that even though we are not at our pre-pandemic trading levels, the amount of money owners are spending on goods and supplies for their venues have increased by 20% across the board. This has been obtained by looking at the average increase in costs across all categories – coffee, baked goods, dairy, poultry, seafood, packaging, everything else.”

These figures also revealed that failed payment attempts between venues and suppliers had increased by 13% since January this year – something that could be attributed to the rising cost of living and current economic conditions in Australia. Majority of increased payment failures occurred during the months of August, September and October of 2022. In a state by state comparison, failed payments in VIC and NSW have steadily climbed followed by QLD and SA.

“There are a few reasons these failed payments could be happening – one of them is, venue owners are just not able to make their payments due to rising cost of living,” said Adam.

How is Ordermentum helping through the crisis?

While a 20% increase in costs and the figure of failed payments show rising cost of living and its pressures, Ordermentum’s platform has been vital in keeping venues and suppliers afloat.

One of Ordermentum’s fundamental roles and key drivers of business and venue/supplier signups is a digital payments function, which allows venues to control their expenditure, and suppliers get paid faster. This has dramatically helped to combat the current cost of living crisis as credit checks are eliminated and payment can be claimed then taken on the spot.

“Despite this year’s increase in failed payments, it’s definitely not the norm – most venues and suppliers on our platform pay and receive payments in a quick and timely manner due to our digital payments function. Our research has shown that suppliers can get paid up to five times faster with Ordermentum. This is the value of digital payments,” Adam further added.

“Many suppliers on our platform would not have been able to trade through the crisis and these turbulent times without digital payments, access to cash flow, reduction of bad debt, and being able to take on new customers, which is what we have been able to help with.”

Ordermentum has auto-reconciliation, accounting integration, and paperless invoicing features that have been able to save various business operators hours of admin weekly. This is a function that has alleviated the stress of labour shortages and business operating costs.

What other helpful feature is on Ordermentum’s platform?

One additional feature on the platform that has helped manage the increasing cost of living pressures include Real Time Insights, whch allow suppliers to analyse customer behaviour and determine which customers are slowing down on their payments, and their overall business performance. For majority of venues, it is an indicator of where their money is going.

“Implementing the right reporting and insights tools can turn business data into real actionable insights. Our Real Time Insights tool has been essential during this tough period.”

“Venues quickly see where they are spending and the cost of goods, and suppliers can see at a glance how their business is performing, which customers are slow on payment or ordering, and how their product ranges are performing, getting an instant snapshot of business performance through our platform is helping owners make informed decisions,” said Theobald.

Mark Lenga, General Manager at food and beverage wholesaler Satisfine Foods said: “This year has certainly been the most stressful for businesses of all sizes, as costs of living increases and the price of nearly everything has gone up. The crisis has been definitely challenging,”

“But because we’ve been using Ordermentum’s platform for a while, we have robust reporting mechanisms in place which means we can easily and quickly understand what’s happening in terms of stock movement and fluctuations in all our customer behaviour. This means we can address things quickly which gives me peace of mind. It has been of great help to business.”

“Additionally, cashflow generally makes the current climate easier to deal with. Previously, a most of our customers used to pay on terms, which is common in the food service industry.”

“This meant that we weren’t getting paid for at least a month or more. This meant that it was hard to get ahead of feeling financially squeezed. Automatic payments on Ordermentum have been a game changer for us, and even when the economic forecast is grim, I feel a lot more secure knowing that as soon as the stock is purchased, we’ll be getting the cash for it”.


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