How small businesses prepared for Melbourne Cup

The champagne-soaked party that is Melbourne Cup is one of the busiest days of the year for hospitality and despite all the early knock-offs and lost productivity, it’s a boon for the national economy.

For many small businesses in the hospitality sector, Melbourne Cup unofficially marks the start of the holiday season, and depending on their location, it’s the time when they have to start scaling up staff.

Tuesdays aren’t traditionally a busy day for cafes, bars or restaurants, but Melbourne Cup is an opportunity for these businesses to boost cash flow by taking advantage of the spike in patronage with people ready to celebrate race day. A good portion of venues put on luncheons, run sweeps and broadcast the race to draw customers in.

This year the timing was good.

According to the latest Australian Bureau of Statistics retail trade data, spending on cafes, restaurants and takeaway food services has slowed sharply, growing just 3.1% in August. In 2014 it was one of the strongest performing categories.

The race that gave small business a boost

Located about 40 minutes north of Sydney’s CBD, micro-brewery Modus Operandi opened especially for Melbourne Cup lunch.

Owner Jasmine Wearin says with a big screen and an abundance of fresh craft beer on tap, the venue was fully booked up.

Wearin was planning for Melbourne Cup trade to be better than general weekdays and both herself and her business partner worked to ensure the cost of running the day didn’t blow out.

“We are usually closed on a Tuesday to the public so we would assume we will have more of a profit increase than usual. To avoid penalty rates we, the owners, work this day as we would work any normal Tuesday,” she says.

The Tuesday party is a public holiday in Melbourne and while venues around Flemington are generally overflowing, for those in other areas, like Hawthorn, it can be quieter for business.

Venue Manager at Beer DeLuxe, Sam Capogreco, expected a busier night on Melbourne Cup eve.

“The night before a public holiday will usually pick up in trade. However the day off and 2-3 days to follow are generally well below average trade,” he says.

That said, there are more people visiting Victoria during Melbourne Cup.

In 2014 Victoria Tourism Industry Council estimated that more than half (54%) of the 104,000 people who attended Melbourne Cup had come in from either interstate or overseas.

Tim Wood, manager of the Aireys Inlet Hotel on Victoria’s Great Ocean Road, said the week of Melbourne Cup is one of the venue’s busiest times and to capitalise on the event he televises the race on the big screen to attract race watchers.

“Public holidays are always our busiest times given we are in a holiday destination. Profitability wise they can be challenging due to the extra loadings,” Wood says.

The mid-week holiday does give the hotel a nice boost, according to Wood.

“It will not be as busy as the weekend as most people will drive home Tuesday. It will certainly be a lot busier than a normal midweek day,” he says.

To ensure Melbourne Cup day is profitable for the business, Wood adds holiday loading to prices.

“We have found it necessary to put a loading on our prices due to the penalty rates. Without that it becomes unprofitable,” he says.

“The penalty rates and loadings on weekends make it increasingly difficult on profitability and keeping our prices reasonable.”

While Melbourne Cup was no doubt a busy day for many in the hospitality industry, managing that spike is always challenging and it certainly seems like there are downsides.

But, managed well, this public holiday can kick-start a great holiday trading season for a small business.

Using the right technology, and with the right planning, you can take full advantage of big days like this.

How did your small business prepare for Melbourne Cup?

Chris Ridd is managing director of Xero Australia.