Why You Should Expand Your Hospitality Empire in 2021
It’s true, last year wreaked havoc on parts of the hospitality industry but for others, it meant unexpected growth and busyness out of extraordinary circumstances. Considering expanding this year may seem wild but it could be a better time than even – an opportunity that won’t pop up again. Stay tuned as we make a case for expanding in 2021, along with a few of the potential issues you may encounter.
The Pros:
Interest rates are historically low which means now’s a better time than ever to borrow to invest. Hot tip: don’t put it all in Dogecoin.
More and more people are working remotely and may be forevermore. This means new opportunities to provide a unique, high quality offering in residential areas. Time to open your second cafe? We can help.
Similarly to the increase in working from home, holidaying locally has increased. With overseas travel still looking largely off the cards for the next six to 12 months at least, many Australians are looking for small local and affordable luxuries such as eating out more regularly and spending more when they do.
There are increasing numbers of leases available on very attractive-looking deals. We’ve heard of leasing agents offering extended rent-free periods, generous fit-out contributions and even sales rent (when you pay some or all of your rent at a fixed percentage of your income instead of a flat rate).
The hit of COVID-19 was very hard for some hospitality business owners, resulting in a low market and bargains to be had. The cost to do this could initially be a little higher, but generally lower over the course of a year than taking on an empty lease.
The Cons:
While Australia has fortunately fared better than much of the world, we are still in the middle of a pandemic and clusters and outbreaks could occur at any time.
The government's appetite to support small businesses looks to have faded. If businesses do run into trouble, they may be on their own in the future.
There may be some tricky headwinds to face this year – the path to recovery may be bumpy at times and in particular there may be a lot of competition to hire the best staff with existing shortages expected to continue for the foreseeable future.
Expanding in 2021 may not be as crazy as it initially sounds, but planning and caution is advised. Got any questions about what’s best for your hospitality business this year? Get in touch with the Cafe Bookkeepers team about business setups and planning.