Tough times for hospitality businesses with rising cost of food and power

Simone Douglas says the cost of running a hospitality service has skyrocketed. (ABC News: Luke Pike)

The hospitality sector is grappling with 'unprecedented' cost increases, business owners and industry experts say.

A publican, who shut her cafe two years ago says businesses are struggling with costs that they 'don't have any control over'.

SA's small business minister says the state is 'the best place in the nation to do business' despite the growing pressures.

Publican Simone Douglas has been pouring pints for decades, but the rising cost of staying in business has become a daily worry.

"If you're a small business owner, your sleepless nights have increased probably by 50 per cent," Ms Douglas said.

"Every day on Facebook there is something that pops up in my feed about another cafe or a restaurant or a pizza bar that's closing down.

"It's a pretty sad state of affairs in the local industry and the national industry at the moment."

Ms Douglas, who operates two pubs in Adelaide and Port Adelaide, has navigated the devastating impacts of the pandemic and economic fallout on the hospitality industry, but warned small businesses were now facing a different kind of emergency.

"It is 100 per cent more challenging [now] than it was during COVID," Ms Douglas said.

"The cost of doing business in South Australia, and particularly in a hospitality environment, is skyrocketing and they are costs that we don't have any control over.

"Life isn't all doom and gloom, but we really need to be aware that if we continue to create an environment where small business can't succeed … the economy is going to flatline."

Simone Douglas says the hospitality industry is in a "sad state". (ABC News: Luke Pike)

Ms Douglas was forced to close her CBD cafe in mid-2024 after she said operating costs, such as electricity, gas and insurance, had "gone through the roof".

"We spent probably 18 months trying to get it to work and … I've been in the game a long time," she said.

"That thing just haemorrhaged money left, right and centre to the point the smart decision was to close it down and absorb the cost of rent."

Restaurant and Catering Australia is the national peak body representing more than 57,000 cafes, restaurants and caterers.

Executive chair John Hart said the challenges experienced in South Australia were part of a national trend, with about 10.9 per cent of businesses closing their doors over the past year.

He said that number equates to thousands of restaurants and cafes across the country.

John Hart says the costs of food, transport and labour have risen.