Sydney venues and hospitality operators are facing mounting pressure to maintain profitability despite strong customer numbers, according to a new industry report.
The State of Hospitality 2026 Sydney Edition, published by Bertoni Hospitality, surveyed Sydney hospitality businesses between April and June this year to examine the conditions facing cafes, restaurants, pubs and other operators across the sector.
The report identifies three major challenges confronting the industry: an increasing disconnect between revenue and profitability, growing cost pressures combined with softer consumer spending, and the personal impact these conditions are having on business owners and operators.
Report co-author and hospitality strategist Mina Iacono says one of the most significant findings is that higher turnover no longer guarantees stronger financial performance.
“Being busy is no longer enough,” she says.
“Many venues are still attracting customers, increasing prices and growing revenue, but too little is being retained as sustainable profit.”
The research captured businesses representing more than $145 million in annual turnover and employing around 950 hospitality workers.
Among those surveyed, 54% reported breaking even or operating at a loss during the previous three months, while 46% identified wages and staffing costs as the largest area of cost growth over the past year.
At the same time, 63% said customers are spending less per visit, highlighting the challenge operators face in balancing rising costs with customer expectations around value.
The report found that 87% of venues increased prices during the previous six months, yet many operators say these increases have failed to offset rising expenses.
As one pub operator quoted in the report observed: “Most of the profit gets eaten up.”
The report also highlights the human cost of prolonged financial pressure, with operators reporting longer working hours, lower personal income, burnout and uncertainty about the future.
According to the findings, 69% of respondents are concerned or uncertain about their business prospects over the coming year, while 40% said they would consider selling their business if current conditions do not improve.
Despite the challenging environment, operators continue to adapt. Businesses reported making changes to pricing, staffing models, menus and systems, while 27% have already adopted AI or automation tools in an effort to improve efficiency and protect margins.