Charlotte Varcoe
RISING electricity costs, increases in staff wages and six weeks of road closures has forced a Mount Gambier/Berrin family-owned business to shut its doors.
Gym Challenge Meals will close its doors for the last time at the end of the month with owner Alex Marlow saying a dip in sales from road closures and a sales deal falling through was the “last nail in the coffin”.
Mr Marlow took to social media on the business’s page earlier this week announcing the shock closure – due to happen on June 28.
The unique hospitality business cooks ready-made nutritious meals for those on the go with Mr Marlow starting the initiative several years ago.
The business moved into its current residence at the Montebello shopping complex five years ago and had since dealt with a range of blows.
This included Covid-19 shutdowns, restrictions, the rising costs of living and minimum wage increases.
Mr Marlow said he feared for the future of hospitality businesses with many battling a range of financial difficulties.
“This year has been really tough,” Mr Marlow said.
“When I speak to a lot of my other friends and colleagues in the hospitality industry they have all seen a 22 to 30 per cent drop in retail trade compared to the same period last year.”
He said the decision to close was “fast tracked” after six-week road closures which “decimated” the business’s cash position.
“Ironically the roads are open now and we have had a really busy week,” Mr Marlow said.
“I have just run out of energy and with the business sale falling through it has been rough.
“There was a settlement date of July 1 so I had another role and opportunity lined up because for me it is time to move on.”
He said he was now “out of energy” and believed the business needed “fresh leadership” and ideas.
“Frankly we can choose to close now and have manageable debts or we can play on for another six months and really be in trouble,” he said.
“This is the mature decision, it is the right decision and although it is hard it is time to move on because we are not making money.
“It is nice for people to tell us how much they love the business but goodwill does not pay the bills and it was time to make the right decision.”
Mr Marlow said he had noticed a drop in sales since interest rate increases and further cost of living difficulties with many customers going from buying one or two coffees per day to a bag of coffee beans a week.
“They might come in once a week now and buy a bag of coffee beans because they have bought a coffee machine,” he said.
“They have to do what they have to do to survive but the same costs they are having in terms of the grocery store are the same costs that are being passed onto me.”
He said while customer sales dropped, his electricity prices increased with this year’s total being 30 per cent higher than the previous year.
“Last year’s electricity bill was unsustainable so for a small business to be paying about $23,000 a year on power alone it is insane,” Mr Marlow said.
“Then there were gas rises and come July 1 there are more minimum wage increases which means superannuation goes up which impacts insurance and Fair Work cover and I just do not see how I can turn around the trajectory in the current climate.”
He said it was also difficult to find a buyer for the business with banks reluctant to finance hospitality businesses due to many shutting their doors.
“There are no home runs in business at the moment, especially in hospitality,” he said.
“Banks want to see a guaranteed return and the thing about being an entrepreneur is there is no guarantee and I think the banks are a bit more averse to risk than they were three or four years ago.
“That has impacted the people who wanted to buy the business who had a great business plan and model but they tried every avenue and could not get anywhere which is really disappointing.”
Mr Marlow said he felt for those in the hospitality industry who were struggling while long-run establishments across the country also experienced similar fates.
“I am worried about the industry, I am worried about our town becoming nothing for tourists to do because anybody who has a go and every entrepreneur who wants to try eventually burns out because it is not sustainable,” he said.
“Some people are still killing it and all power to them but in general it is tough out there and you have got to be so switched on and watch every dollar and it is going to force businesses to run more efficiently which is great.
“Hopefully people can streamline their businesses but in general it is a tough gig.”
