Despite remaining busy and attracting customers, many hospitality venues in Sydney are struggling to convert that into sustainable profit, new research has revealed.
The State of Hospitality 2026 Sydney Edition, published by Bertoni Hospitality, surveyed Sydney hospitality operators between April and June this year to understand the conditions facing cafes, restaurants, pubs, and other hospitality businesses.
The independent industry report found three key themes emerging across the sector, including the growing disconnect between revenue and profit; the pressure created by rising costs and softer consumer spending; and the personal toll these conditions are taking on operators.
Report Co-Author and Hospitality Strategist Mina Iacono says the most significant finding was not simply that costs had increased, but that the traditional relationship between stronger sales and improved profitability appeared to be weakening.
“Being busy is no longer enough. Many venues are still attracting customers, increasing prices, and growing revenue, but too little is being retained as sustainable profit,” says Iacono.
The research represented businesses with more than $145 million in turnover and approximately 950 industry workers. It found 54 per cent were breaking even or operating at a loss over the previous three months; 46 per cent cited wages and staffing as their largest cost increase over the previous 12 months; and 63 per cent reported that customers were spending less per visit.
Of those surveyed, 40 per cent said they would consider selling if conditions remain unchanged.
“For many operators, customers are still coming through the door. The challenge begins after the sale is made,” the report says.
It says the challenge is no longer simply managing costs, but protecting margin while continuing to deliver value.
“Most of the profit gets eaten up. Although I make a profit, it’s barely worth it when I take into consideration the risk, stress and hours I work. It’s a joke,” says a pub operator in the report.
The report also reveals the human impact of prolonged financial pressure. Operators are describing longer working hours, reduced personal income, burnout, and growing uncertainty about the future.
“This is not an industry refusing to adapt. Operators have changed prices, menus, rosters, systems, and operating models,” says Iacono.
One restaurant owner says it makes it very stressful, as they are always in survival mode when the cost of everything keeps going up.
Bertoni CEO Anthony Iacono says operators are being squeezed from both directions.
“Wages, food, utilities and fixed costs continue to rise, while customers are becoming more cautious about how often they visit and how much they spend,” he says.
The report by the numbers
87 per cent increased prices in the past six months
44 per cent of operators describe the Sydney hospitality market as challenging right now
27 per cent of respondents are using AI or automation tools
46 per cent of cafes reported reduced customer spend
11 per cent of pubs and clubs say rising costs are making it hard to maintain value for customers
69 per cent are concerned or uncertain about their business in the coming year
The full report can be viewed here.
Photography by Alexander Popadin / Pexels.
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