Rising costs push more Victorian businesses into insolvency

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• By Avi Yemini

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Victorian businesses that managed to survive government-imposed lockdowns during the Covid pandemic are now struggling to survive rising interest rates, skyrocketing rents, and soaring power bills, with many going broke. 

Insolvency data released by the Australian Securities and Investments Commission (ASIC) shows 140 Australian accommodation and food services went broke in the first quarter of the year, half of them in Victoria. 

The head of Australia’s peak restaurant body, Suresh Manickam, said restaurants and cafes were “feeling the pinch, no two ways about it”. 

He said operating costs had skyrocketed and unseasonal weather events leading to food shortages had pushed prices up. 

“One of the factors that is really paramount in our industry is energy costs. And that has gone up considerably,” he said. 

Another factor affecting city food outlets was the propensity of workers to operate from home rather than return to the city where they had worked full time before Covid lockdowns. 

Mr Suresh described the situation as a “perfect storm” for battered Melbourne business owners. 

Creditor Watch industry data from the latest Business Risk Index has revealed the hospitality industry is most at risk of default as cost-of-living pressures bite, followed by the construction sector.