NSW covid lockdown extension threatens to bankrupt small businesses

The cost of the Greater Sydney lockdown is causing a brutal financial hit, with an estimated $3 billion lost in terms of retail trade, while cafe and restaurants are set to miss out on $700 million in revenue.

Wes Lambert, CEO of the Restaurant and Catering Association, said small businesses are the most vulnerable during lockdown, with more than 93 per cent of business in the food service industry earning less than $38,500 a week in revenue.

The restaurant, cafe and catering segment alone stands to lose nearly $700 million in revenue due to the three-week lockdown in Sydney, he added, with many business at risk especially in the Sydney CBD.

“Many are not able to pivot to takeaway and delivery, especially those that are in the CBD and they are worried about whether they will survive this latest lockdown,” he told news.com.au

“There are myriad reasons they can’t do takeaway and delivery. There are cafes in the bottom of high rise buildings that are missing out on footfall and some did not offer takeaway and delivery before lockdown and certainly would find it difficult to pivot into that revenue channel in lockdown.

“In addition, many believed lockdown would end on Friday and had geared up to go back to dine in with bookings for that time, so they had not taken the time or expense to go back to that 100 per cent takeaway and delivery model.”

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Valerio Domenici, who owns Vucchero Caffe Bar, said business was currently down 70 per cent.

He opened his cafe in 2019 and in just two years has been “smashed” by lockdowns, he said.

While he offered delivery last lockdown, he said it didn’t really work, so this time he is relying on people dropping by to pick up a takeaway coffee or pastry from his Artarmon cafe.

“It’s a bit different to the last the lockdown as then we still had high traffic coming though and in this one we are right opposite the train station and people aren’t commuting into the city, so we are definitely missing out on those people,” he told news.com.au.

“Last time we did OK, but we are struggling as people aren’t around and out and about as much.”

He said one of the main reasons he was open was to ensure his foreign staff got paid and could “feed themselves”, otherwise they were not entitled to any financial assistance.

‘Devastating impacts’

Paul Zahra, CEO Australian Retailers Association, said he was supportive of the NSW Government’s efforts to keep the community safe, but the devastating impacts this lockdown is having on retailers and small businesses can’t be ignored.

He said foot traffic had dropped to zero in the CBD as some businesses faced insolvency.

“We have grave concerns for smaller retailers in the CBD, who were already crippled by the ongoing Covid impacts before this latest outbreak, with low office populations and a lack of tourists contributing to sluggish trade throughout the pandemic,” he said,

“While some businesses can stay open through the current restrictions, the reality is people are not going to the shops in their usual numbers and many businesses have decided it’s not worth the trouble of opening their doors at all.”

Smaller businesses such as coffee shops, drycleaners and florists are particularly hurting, he added.

The NSW government will spend $1.4 billion to help small business survive, while NSW Treasury estimates the three week shutdown will cost the NSW economy $2.5 billion.

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More support needed now

Businesses closed by the lockdown have called for better support, particularly for immediate expenses like rent and staff wages.

Avi Efrat, who owns Fantastic Framing which has three stores across Sydney, said he is set to lose $100,000 alone from just two weeks of lockdown.

“It’s a big hit for us this Covid situation,” he said.

Just over a week ago, NSW Treasurer Dominic Perrottet announced grants of between $5,000 and $10,000 to small businesses impacted by the lockdown, as well as payroll tax deferral for employers. Businesses were only eligible for grants if they had an annual turnover of $75,000 or more but it’s believed this requirement will be removed.

While Mr Efrat, 39, welcomed the NSW Government’s help, he said it doesn’t stretch far.

“When you have 10 staff and three stores it’s not a lot of support to from the government,” he said.

Mr Efrat said the store was trying to adapt to lockdown with sales through an online store and by offering pick up and drop off services for framing.

He urged people to get on board and support small businesses in three ways, including through word of mouth, social media and shopping locally.

“Spreading the word about local small businesses and the great work they do is so vital for us right now,” he explained.

“Sharing thoughts or images of local products on social media is helping small businesses with customer reach. Don’t go buying things from online shops that ship from overseas right now. Now more than ever, local business needs your support.

“From buying a piece from a local artist and getting it framed by a local framer, we are so thankful.”

Mr Zahra has called for the reinstatement of JobKeeper to help small businesses.

“Sydney CBD is a ghost town at the moment as most people stay away and obey the public health orders. There’s no doubt the current lockdown will tip some businesses over the edge and we can expect more ‘for lease’ signs going up,” he said.

“Some major retailers may be able to offset their losses at other locations, but if you’re a small business like a café owner in the CBD – it’s a dire situation, especially with no proper safety net like JobKeeper.”

But a plea from Mr Perrottet, who wrote to federal Treasurer Josh Frydenberg with the request for JobKeeper support to return on Wednesday, was knocked back.

Mr Frydenberg said the emergency support was a response at the height of the pandemic only.

“We are not bringing back JobKeeper,” he said.

How to help small businesses

A social media campaign has been started to support small businesses which are expected to lose billions from being shutdown.

The brainchild of local Sydney florist The Flower Posse, it is encouraging people to share on their Instagram stories which businesses they are supporting in their neighbourhood.

The template allows people to highlight where they buy coffee, a store they will support, their favourite takeaway meal, somewhere new they plan to try and the first business they are visiting after lockdown.

It comes as small businesses face a fight for survival as the lockdown carries on.

Mr Zahra said businesses in lockdown affected areas need all the help they can get at the moment.

“The best thing people can do is to support them through the online offerings they have available,” he told news.com.au.

“Online, click and collect and deliveries are still available and we encourage people to use those options for getting the goods and services they need. Most retailers have an online sales platform, so if there’s items you would normally buy in store – check out the online purchase, collection and delivery options they might have available.”.

Mr Lambert also called on consumers to frequent their suburban cafes and restaurants for coffee, morning and afternoon tea, lunch and dinner.

“For those businesses that remain the hardest hit, consider substituting some meals you would normally get at a grocery store for takeaway and delivery,” he said.

Cafe owner Mr Domenici also insisted people should “share the love” when supporting local businesses.

“I think just coming down and visiting and buying a couple of coffees, or a lunch every so often or a pastry is a token gesture,” he said.

“But in my local area I say to clients share the love, don’t always come to me, try other cafes and businesses in the area that way we can all stay afloat.”

He also urged people to follow the rules.

“Everyone needs to consider their actions, with house parties and all sorts of things the ramifications has a big knock on effect on absolutely everyone … so do the right thing,” he said.

There isn’t just a financial cost – it’s a social one as well for small business owners, Mr Zahra added.

“The lockdown is taking an enormous toll on people’s health and wellbeing and it cannot go on for longer than is absolutely necessary,” he said.

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