Australia's suburban cafes surge as CBD coffee roasters hope for post-Covid comeback
As millions of Australians enter another month of working from home, suburban cafes that survived the initial Covid economic downturn have begun reaping the benefit.
“Everyone working from home really boosted the cafe,” cafe owner Jimmy Vilaysack says. “And every week, it just kept building up and building up, until it became extremely profitable.”
The proprietor of the soon-to-be-rebranded Fork and Spoon in Meadowbank in Sydney’s north-west found the pandemic brought his business and customers closer together.
“I owe it to them. If it wasn’t for my local community, I know for certain that I wouldn’t be open right now.”
Vilaysack says his cafe’s turnover has doubled in recent months as locals who no longer have a commute flock to his establishment for their caffeine hit.
But as suburban cafes cash in from the new remote working reality, their city equivalents have hit tough times as the pandemic empties CBDs of the daily traffic of workers.
For Trevor Simmons, co-founder of Industry beans which runs cafes in Melbourne, Sydney and Brisbane and a wholesale roaster, the shift has devastated their CBD cafes.
“As soon as the lockdowns came in and restrictions were in place, they dropped down nearly 90%, within a week. It was almost like switching off a light.”
As restrictions eased in Sydney, business did return to their York Street cafe, but it was only at 50% of their preCovid numbers.
“That initial bump was great, but nothing has changed since then. We expected things to gradually increase, but instead it’s jumped then plateaued,” Simmons says.
He also noted the flip side, with suburban cafes they sell their beans to experiencing a huge surge in demand.
“Across our wholesale network, it seems to be that the further from the city you are, the better you’ve done.”
Sean Edwards, the managing director at Cafe Culture International, said the decline could lead to many CBD cafes closing down.
“Especially since offices won’t be returning to normal for a while, and with the jobkeeper cuts this month, I reckon there will be a massive clearing out of city cafes – especially the ones in the city blocks.”
Research company Roy Morgan analysed movement data in Melbourne and Sydney CBDs, and found foot traffic in Sydney’s CBD had dropped to 53% of the levels seen earlier this year, even as restrictions were eased in June.
Melbourne movement data showed it was at only 39% of levels seen earlier this year, and that was before the more recent stage four lockdowns.
Michael Levine, CEO of Roy Morgan, said the data showed how difficult things are for cafes and retail in the CBD, even after restrictions are eased.
“Despite the relatively effective handling of Covid-19 by the New South Wales government, these figures illustrate the tough environment faced by CBD retailers reliant on significant foot traffic.”
Nonetheless, cafe spending across the country had seen a spike. Edwards said that a 30% spike in sales has largely been driven by suburban and regional cafes.
Analytics firm AlphaBeta, a part of Accenture, and credit bureau Illion, have developed a spending tracker that shows cafe spending across the state is now higher than it was before the pandemic.
In the week ending 20 September, cafe spending was up 12% compared to pre-Covid.
The surge in demand for suburban cafes has shifted the dynamics of the industry. Usually slow weekdays at suburban cafes have become supercharged, with locals now visiting daily as opposed to just on weekends.
Simmons’s wholesale network reflected that shift, with some cafes in the suburbs of Sydney and Melbourne doing weekend numbers everyday.
“They used to do 10 kilos a day on the weekends, now they’re doing 10 kilos a day every day of the week, which is crazy.”
Vilaysack similarly said his weekdays had bounced back enormously.
“Our Friday trade is now close to our Monday trade. It’s starting to even out, with probably just a couple hundred
dollar difference.”
Nestled near a walking track and between apartment blocks, Fork and Spoon, which will be relaunched as Jimmy Choose, was well positioned to benefit from people working from home.
“We printed out 15,000 flyers, and went around our local area, around Meadowbank and Ryde, and just dropped them in the letterboxes at all the apartments and houses nearby.
“People started noticing us from the flyers, and we were noticed by people exercising. Lots of locals were just walking by and coming in to take a look.”
The changing geographical dynamics in the industry has had its downsides, but it also opens opportunities for many forward-thinking cafe owners.
“Eventually people will go back to their office,” Jimmy said. “I was thinking now would be a perfect time to get in there (CBD) while rents are relatively acceptable, to … establish ourselves.”
He’s on the verge of finalising the purchase of a cafe near Sydney’s Downing Centre courthouse, and is hoping to have it open in the next month.
“Once the city is back to being fully operational, we’ll benefit. We would have already established our name there.”
Edwards also shared Jimmy’s optimism about the city, saying he also thought there will be a rebound.
“The CBD will bounce back. This will be a bit of a clean out, we’re expecting a turnover in owners of CBD cafes across the country, but it’ll come back.”