Trying to make a buck from food aint easy

IN A GOOD WEEK, NEIL PERRY LOSES $5000 AT ROCKPOOL, the restaurant that made him as one of Australia’s greatest chefs. In a bad week, it’s much, much more.

Despite 21 years at the forefront of Sydney dining, Perry can’t remember the last time his flagship restaurant turned a profit.

“It did alright in the first few years, but Rockpool hasn’t made any money for a very long time,” the top chef says.

But Rockpool and Neil Perry are synonymous, so the restaurant, in Sydney’s Rocks, which for several years featured in the World’s Top 50 restaurants, is now what retailers call a “loss leader”, since the Rockpool “brand” drives all his other business ventures.

Perry’s view is more romantic.

“It’s a love for us,” he says. “Otherwise, we would have stopped 15 years ago.”

Perry’s diverse empire, which ranges from three more restaurants, including Rockpool Bar & Grill in Melbourne (with another, Spice Temple, opening at Crown in October this year), to his consultancy with Qantas and range of supermarket products, keep Rockpool’s doors open.

The difficulty of fine dining was highlighted recently when another posh Sydney restaurant, Pier, “renounced” the critical acclaim of leading food guides to head downmarket.

Faced with the loss of two talented chefs essential to Pier’s success, as well as local diners who baulked at paying $45 for an entrée and $65 for a main, chef-owner Greg Doyle made the dramatic gesture of handing back his awards to say that his days as a dining top dog were over.

Prices were slashed by 25 per cent and the service, which previously saw waiters wearing white gloves to put cutlery on the table, was relaxed. Doyle hopes the change will bring back the locals and others who only saw Pier as a Big Night Out destination. Nonetheless, with entrees around the $30 mark and mains in the mid-$40s, Pier remains expensive.

However, the question isn’t so much whether customers can afford fine dining, but can restaurateurs? The industry has never been more popular, however, margins have never been slimmer.

‘It’s a double-edged sword – profitability is not increasing with revenue,” says Restaurant & Catering Australia CEO John Hart.

While last week’s Fair Work Australia decision to lift the minimum award wage by $26 week was a major boost for Australia’s lowest paid workers, the restaurant industry opposed the increase, fearing the rise in costs in the labour-intensive industry would bite into already slim profits.

Wages are up to 40 per cent of costs, especially at the top end. Rockpool’s 16 kitchen and 20 service staff means there’s at least one employee for every three diners.

“It’s almost impossible to get wage costs right in Australia,” Perry says. The challenge of fine dining, he explains is that “everything tends to be bigger – from the kitchen to the wine list and staff numbers, which all add significantly to the costs”.

Restaurateurs would love a problem like a Super Profits Tax.

The Australian Bureau of Statistics found that two-thirds of restaurants survived on a profit of less than two per cent. For the remainder, the average is four per cent, down from 16 per cent a decade ago. A staggering 60 per cent of restaurants will fail within three years – a quarter in just 12 months. Even the greatest, including the man dubbed the “godfather of Australian cuisine, Tony Bilson, has seen his share of failures over a 40-year career. Bilson’s, at the Radisson Plaza Hotel enjoys three-hat status, however the chef has branched out to open the cheaper Number One Wine Bar at Circular Quay.

However, Matt Moran, whose Aria restaurants, in Sydney and Brisbane, are notably elegant and expensive, says its possible to make a buck from fine dining.

“But in comparison to the profit that some cheaper style, high volume restaurants make, it is a very modest profit,” he says.

Despite the size of the bill at the end of the meal, Moran argues that fine dining can be good value.

“I’ve paid $30 for an atrocious main course and an utterly forgettable experience which I would describe as terrible value, whereas I’ve paid over $1000 for a dinner for two in at Alain Ducasse in Paris, which I’ll remember for years. Value is all relative.”

Moran doesn’t think fine dining is in danger of dying out as cost-conscious diners embrace cheaper, simpler, bistro-style restaurants.

“I think that people will always want to enjoy a world-class restaurant experience and they will be happy to pay for it. The increasing amount of casual restaurants tends to more readily define the amount that people are eating out and the change in daily eating habits, but I don’t think that they will ever completely replace a fine dining experience,” Moran says.

Perry agrees: “Really great restaurants are so much more than the food. It’s the feeling you walk away with.”

Profit or loss, you can tell he won’t be walking away from Rockpool any time soon.


* A version of this story first appeared in The Daily Telegraph, June 2010

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