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Restaurant & Catering Australia
23/02/2026
Press Release — For Immediate Release
Hospitality Sector Records Highest Business Failure Rate in the Economy — and the Debt Trail is a Policy Problem
New business risk data confirms what operators already know: running a café or restaurant has never been harder. With 10.4 per cent of foodservice businesses closing in the past 12 months — the highest failure rate of any sector in the economy — Restaurant & Catering Australia (R&CA) says this is no longer just an industry problem. It is a fiscal and economic policy problem.
Critically, new businesses are still opening. The number of entrants into the sector continues to exceed exits. But the conditions greeting them are the same ones that forced their predecessors to close — and the cycle is unsustainable.
When a hospitality business fails, it rarely goes quietly. It leaves behind unpaid suppliers, outstanding wages and superannuation, and tax debts owed to government. That trail of liability is distributed across small businesses, workers and the public purse. This is not just commercial misfortune — it is a structural failure with real consequences.
“The maths is not working for too many operators. Costs have risen faster than any business can absorb. Revenue is there — Australians are still dining out — but making a profit is becoming almost impossible. When businesses close with debt, everyone pays: suppliers lose income, staff lose entitlements, and government loses revenue it was counting on.”
— John Hart OAM, National President, Restaurant & Catering Australia
R&CA says the data reflects a structural cost environment, not a demand problem. ABS figures confirm consumer spending in hospitality venues remains solid. The issue is that operating costs — wages, energy, insurance, rent and compliance — have escalated beyond the capacity of margin-thin businesses to absorb.
Independent cafés and restaurants, particularly in suburban and regional communities, are bearing the greatest pressure. These are not large corporates with financial buffers.
They are family-run businesses operating on discipline and optimism, doing everything they can to stay open.
“Every postcode in Australia has a local venue that employs people, trains apprentices, supports nearby suppliers and keeps the main street alive. When one closes, that community feels it. And when it closes with debt, that damage ripples further.”
— John Hart OAM
R&CA is calling for urgent policy reform focused on:
- Streamlining compliance and reducing regulatory duplication
- Addressing insurance affordability
- Improving energy pricing transparency
- Ensuring workforce policy reflects a seven-day trading industry
The sector contributes $66 billion to the Australian economy annually and employs hundreds of thousands of people. Policy must support viable operating conditions. Without it, closures will continue — and the cost of those closures will be shared far beyond the businesses themselves.
About R&CA
Restaurant & Catering Australia is the national industry body representing restaurants, cafés and caterers across Australia.
R&CA advocates on behalf of operators at federal and state levels, provides workplace relations and business support, and leads industry initiatives that strengthen the sustainability and viability of Australia’s hospitality sector.
Media Contact
Venessa Barnes
Head of Growth & Partnerships
vbarnes@rca.asn.au
0413732652
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