Recent actions around easing the labour shortage situation and other economic data appear to present positive signs for the hospitality industry. Signs that may point to the time being right to upgrade facilities with cheaper equipment finance.
While the lockdowns and other COVID restrictions impacted pretty much all businesses, the hospitality industry was definitely one of the worst impacted. This was one of the first industries to be closed completely during the first lockdown in 2020 and even after reopening, faced capacity limitations which severely restricted the ability to fully operate.
These issues have been extremely challenging but many operators cleverly managed and found work-arounds. Not so easy to solve has been the problem of staff shortages. The sector has been reporting shortages of staff, especially qualified chefs, housekeeping and other workers since way back in late 2020. The issues stemmed from a number of sources including the lack of international migrant workers and students that left Australia at the pandemic onset and many hospo workers leaving the industry due to the uncertainties of secure employment.
But the situation may start to improve significantly and that may give reason to revisit those plans to revitalise the venue with new equipment. The are also a number of signs in the lending and finance area that we have identified as possibly pointing to the right timing to purchase hospitality and catering equipment with finance.
Positive Signs and Indications
On the labour issue, the outcomes that have emanated from the recent summit on jobs and skills are encouraging. The Treasury department has posted the report on the outcomes which show what will be addressed immediately and what will be addressed down the line.
The actions which the Government report states will be addressed immediately include:-
- A significant increase in the intake for migrant workers.
- Boosting resources to ease the backlog in processing work visas.
- Easing the conditions around which international graduates can work.
- Increasing the amount of income that recipients of the aged pension can earn before the pension is impacted.
The unemployment figures may also give rise to increased positivity. The rate has been dropping for many months and hit a 40 year low of 3.4%. But as reported by the ABS the rate actually increased in August. Only by a small amount to 3.5% but it may indicate an easing in the tightness of the labour market. A tightness which has been acknowledged by the RBA as constraining business capacity.
Another positive sign for hospitality and other food providers comes out of the consumer spending data, also released by the ABS. This shows continued strong demand for spending in venues such as restaurants and cafes and takeaway outlets.
In the mix when considering taking on any business finance is of course interest rates. As most will be well-aware, the RBA has hiked the cash rate for several consecutive months and indicated that further rises may be appropriate. While Jade Finance focuses on achieving the cheapest commercial finance rates for equipment finance, these rate rises are being felt across the lending sector.
Businesses that can move swiftly with equipment acquisitions may avoid interest rate rises which may be announced in coming months. To start prepare budgets for purchasing the required equipment, take advantage of our Finance Calculator.
One of the strongest motivators for hospitality operators to action equipment acquisition plans may stem from the current tax measures. Temporary full expensing allows for the full price of eligible assets by eligible enterprises to be fully depreciated (tax deducted) in the same year that the equipment was acquire. This can represent a much larger depreciation amount compared with the normal schedule.
But back to the timing and temporary full expensing, which has been in the offing since April 2020 is due to expire on 30 June 2023. That may seem a while away, but Christmas is a busy period in hospo and most operators will be focussing on maximising their turnover at that time. Acting now, may ensure that those plans do happen.
Equipment Finance Options
Our equipment finance products are available for a wide range of equipment that may be required by the hospitality and catering industry. Not limited to customer-facing businesses such as cafes, bars, hotels, takeaway outlets and restaurants, we also finance equipment for caterers in areas such as care homes, hospitals, institutions and through the food chain from producer through preparation to the plate.
The type of equipment financed may include anything in the kitchen and food preparation areas through to the service and customer areas of the venue. We also don’t overlook the back-of-house requirements such as storage, computer and accounting systems and security systems. For those wanting to give their venue a full refresh, speak with us about fit-out finance.
The finance products include:-
- Rent to Buy
- Commercial Hire Purchase
- Chattel Mortgage
To decide which finance product will deliver the better outcome for the business at this time, we strongly recommend that operators discuss this with their accountant.
The signs are looking more positive so now may be the right time to upgrade your establishment with cheaper finance.
Contact Jade Finance 1300 000 008 for hospitality and catering industry equipment finance
DISCLAIMER: NO LIABILITY IS ACCEPTED IF ERRORS OR MISREPRESENTATIONS ARE FOUND IN THIS ARTICLE. THE ARTICLE IS PREPARED AND PRESENTED FOR GENERAL INFORMATIVE PURPOSES AND IS NOT INTENDED TO BE THE SOLE SOURCE OF INFORMATION FOR MAKING FINANCIAL DECISIONS. THOSE REQUIRING GUIDANCE AND ADVICE SHOULD CONSULT A FINANCIAL ADVISOR.