Restraint on the menu at Illawarra cafes beset by rising costs, falling income

Some Illawarra hospitality bosses have described how the industry is ditching bells and whistles dining as part of their strategy to survive uncertain financial times.

Chris Henry, owner of Thirroul's Blackbird Cafe, believes the industry is shifting its focus away from "the excesses and the photo-worthy food we were seeing before".

"That formula doesn't so much work now," he said. "You can't just put a fancy product on and be expecting people to just try it because it looks good. I think it's putting a bit more honesty into the industry, and into the food itself."

"We're doing a lot more toasted sandwiches and wraps, whereas before we were getting fresh seafoods and using more expensive options. That's not feasible for us any more because of the increase in our operational costs."

Mr Henry has weathered increases to the cost of his business's perishables, rent, electricity, gas and wages. Meantime, he has seen rising interest rates curb his customers' willingness to spend.

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The business gets fewer families. While muffin and coffee sales remain strong, fewer people are buying full breakfasts or lunches, worth upwards of $20.

"COVID was actually a lot easier to navigate," Mr Henry said.

"People who had money and time on their hands were actually willing to support businesses.

"This has just stumped us on the best way to pivot and what to change, because at the end of the day if people are unwilling to spend - regardless of what you're doing - then you're not going to be able to pull through."

Despite this, Mr Henry - an industry veteran with 30 years experience - believes a loyal customer base and good management will see his business survive.

There are currently 60 businesses from the region's food, beverage and hospitality sector listed for sale.

Australia-wide insolvency data for the food and accommodation services sector shows 207 businesses went belly-up in the financial year to August 2023, compared to 170 the year before and 104 during the same period in 2021.

At Evil Eye Beach Cafe in Wollongong, owner Kayahan Gunes is seeing more diners sharing meals and more people saving their dining out experience for the weekend, with mid-week trade sluggish.

He has twice revised his menu recently, with edible flowers and novelty, chocolate-filled syringes from the dessert menu among the frivolities now scrapped.

"We had to source those from a different supplier - they're not cheap," Mr Gunes said.

"We've cut down on the amount of milkshake syrups and on the amount of things we have in the cake display.

"If we had 10 breakfast items, we've now put it down to maybe five. We've removed the things that weren't selling well."

He says he has tried to keep price hikes at bay, but that some customers have still complained about the cost of their food.

"I don't know what they're comparing it to - Woolworths or McDonalds? But even they are not cheap," he said.

"You can only raise your prices so much before people stop coming in."