As the cost-of-living crisis tightens its grip and Australians rein-in discretionary spending, dining out is increasingly on the chopping block, placing fresh pressure on an already strained hospitality sector. New research from ING shows nearly three in 10 Australians plan to cut back on eating out at restaurants and cafés. At the same time, data from the Australian Restaurant & Cafe Association (ARCA) reveals one in nine hospitality businesses became insolvent in 2025, while average restaurant profit margins shrank to just 2.8%. Businesses are having to do more to manage costs than just shrink portions and up prices. Picture: Dan Gold / Unsplash Against a backdrop of persistent interest rate hikes and rising input costs – which have climbed 20-40% since the pandemic – food consultant Suzee Brain said venues are being squeezed from both sides. “You’ve got costs going up and sales going down, so businesses are really caught between a rock and a hard place at the moment,” she said. “Restaurants can tweak portion sizes or adjust the quality of produce, but these are marginal gains when it comes to meaningful cost cutting.” As a result, many operators are shifting their focus beyond small in-house adjustments, instead looking to technology as a more effective lever for reducing costs and improving efficiency. “Technology platforms like delivery apps might seem obvious but are now becoming essential to restaurants. Many are realising they can’t afford to opt out of them.” Food consultant and director of Titanium Investments Suzee Brain. Picture: Supplied Saving dollars with data For Gradi Group, an operation of seven Italian restaurants and gelaterias across Melbourne and Adelaide, restaurant intelligence platforms like Restoke.AI have become a key tool in tightening cost control. Plugging into a venue’s existing systems, the platform provides a live view of margins, costs and wastage, helping pinpoint where money is leaking and how to address it, from adjusting menus to flagging supplier price increases and optimising ordering. Gradi founder Johnny Di Francesco told realcommercial.com.au the app has streamlined his menu costing. Restoke.ai co-founders Ken Brand and Assaf Stizki with Gradi Group founder Johnny di Francesco. Picture: Supplied “All our recipes are in one system now, whereas before they were spread across multiple Excel spreadsheets. If there’s an increase or decrease in an ingredient, the app will automatically adjust our recipe costs. It gives us a clearer picture of what’s happening across the business,” he said. “It’s also integrated with our point-of-sale system, so we can track how many items have been sold and compare that against stock on hand. By tying in updates from third-party suppliers, we get an accurate real-time understanding of our cost of goods.” Mr Di Francesco said the platform has also improved cost accuracy by factoring in real-world yields. “It stabilises our costs,” he said. “Once yields are accounted for, we’re not under-pricing or pushing dishes beyond the market. It’s made our margins more consistent and efficient.” Restoke.ai is helping restaurants and hospitality businesses manage their costs. Picture: Supplied Letting AI take the load Sydney-based Atticus Hospitality director Michael Fegent says AI is proving a powerful tool in cutting costs and improving the customer experience, particularly when it comes to handling bookings and reservations. “Ultimately you want staff focused on the floor, not tied up taking reservations, which is where an AI agent comes in,” Mr Fegent said. “We still have someone overseeing bookings during the day, but in the evenings, AI takes over. It reduces labour costs and, more importantly, during busy dinner services we’re not stuck answering phones. We can focus on the customers instead.” Atticus owner Michael Fegent is using AI to streamline bookings and stocktakes. Picture: Supplied He added that ChatGPT has also streamlined voice-operated stocktaking, further reducing labour hours. “Traditionally, stocktakes meant walking around with pen and paper and it just took forever. Now you can record everything verbally and it speeds the process up massively.” And with venue construction and fit-out costs now 30-50% higher than pre-pandemic levels, many operators are holding off on upgrades. But Mr Fegent said AI is starting to change that too. “I’ve designed entire fit-outs by sourcing images online and feeding them, along with architectural plans, into ChatGPT,” he said. “It can save significant time and money. In the past, you’d rely heavily on architects and specialists, but now you can map out a venue fit out yourself.” Schole, a new restaurant in Hobart. Picture: Supplied, Adam Gibson Now we’re cooking with…electricity According to the Global Cooksafe Coalition, restaurants can save more than $55,000 a year (equating to around 50% in energy costs) by switching from gas to electric kitchens – as much as that sounds like sacrilege. Restaurateur Luke Burgess, owner of newly opened Hobart venue Scholé, has used electric kitchens for more than a decade and says the gains come down to efficiency. “With gas, you can lose up to 90% of the energy as heat escapes around the pan or pot,” he said. “So to achieve the heat you need, you’re effectively only using a fraction of the energy you’re paying for. That adds up quickly dish by dish, pot by pot, over the course of a year.” Schole owner Luke Burgess has switched to electric cooking instead of gas to save on costs. Picture: Supplied, Jana Langhorst He said the savings extend beyond energy use, with labour costs tied to cleaning also significantly reduced. “With gas, you’re pulling stoves apart, cleaning jets and scrubbing cooktops which can take 30 to 40 minutes,” he said. “I can clean my electric stoves in about a minute and a half. Over a year, that’s around $32,000 in wage savings for a small to medium venue, or more for larger operations.” While upfront costs are higher, Burgess said the long-term economics stack up. “Let’s say you’ve got a five-year lease and an induction setup costs $60,000. By year three, the labour savings alone have paid for it,” he said. “If you’re thinking long term, the savings are well worth the investment.”