On the same day Australia’s top leaders were busy revealing details of the impending “Voice” referendum—garnering national media attention—business owner Arif Memis was scrambling to hold the fort around his embattled Cowch Dessert Cocktail Bar.
Bruised and battered by a series of crises—some natural, some government-made—Memis has been forced to hand over the keys to the business he started in 2014 to administrators.
“Long story short, last year was pretty tough and this year hasn’t been easy either,” he told The Epoch Times.
Memis had gradually built up Cowch’s shop network from one to four, before opening a major production facility in Morningside, Brisbane in 2021. The business had over 100 staff and was turning over $7 million per year.
Lockdowns And Floods Strike
Yet just a month later, Cowch would be buffeted by the Queensland government’s decision to shut the domestic border in response to the Omicron outbreak in the southern states of New South Wales and Victoria.The move effectively cut foot traffic to Cowch’s store on the Gold Coast—a major tourist strip—by around 70 percent.
“We’re a very conformist state. If we tell people, ‘Stay home and don’t go out.’ People stay home and don’t go out,” Memis said. “We needed that late-night dining. We needed those people from the southern states to come up, feed, get the nice weather, and stay up late.”
In early March 2022, Cowch would face another battering, this time from the floods, which inundated the South Bank precinct near the CBD—the location of the first Cowch store.
This was while the business’s overheads had increased with additional chefs and staff to man the production facility and head office.
Supply Chain Pressures, Interest Rate Rises Strike Next
The consequences of pandemic-era policies such as prolonged international border closures, supply chain constraints, and artificially low-interest rates would soon sweep through.“We caught the interest rate rise, we had a shortage of staff, and raw ingredient costs started to increase,” Memis said.
Cafes have reported a dampening in customer spending after the Reserve Bank of Australia (RBA) implemented 10 consecutive interest rate rises to deal with inflation—a product of excessive currency printing during the pandemic period.
“It’s a warning sign for people in government and the Reserve Bank that the interest rate rises are really biting now,” says Campbell Newman, former premier of Queensland.
“I don’t think they really understand the ‘lag effect.’ Once they start to bite, they come on with a vengeance,” he told The Epoch Times.
In terms of Cowch’s raw ingredients, since the war in Ukraine, prices have skyrocketed.
“We receive butter, milk, eggs, there’s certain gums that we import for gelato manufacturing, some of those products have gone up 700 percent. How do you pass that on to the customer? You just can’t,” Memis said.
He also revealed exporters had raised the minimum quantities they would sell.
“Before a simple item like locust bean gum for gelato manufacturing could by purchased in five kilo bags—that’s thousands of dollars for one kilo—not only does the price go up, but now you have to buy a minimum 25-kilogram bag,” he added. “So, the holding costs go up as well.”
Hopes for Local Facility Dashed as Pressures Pile On
Cowch’s production facility was supposed to be a source of locally made pancakes and waffles. The business owner says Australia imports around $67 million worth of waffles a year, and $380 million in pancakes and crepes—very little is produced in the country.Memis says importing is technically worse for the environment.
“Right now, the imported stuff is on a ship for a certain amount of time—it’s all those greenhouse gases, it’s polluting the atmosphere. Also, those products were probably made a year ago [before arriving on our shores],” he said.
“Imported prices and our prices are the same. But the problem is I’m running at 60 percent labour [from total sales] because everything is handmade. So, we were trying to push towards semi-automation,” he added. “But we just didn’t have deep enough pockets.”
The challenges for Cowch are reminiscent of those that claimed Scott’s Refrigerated Logistics, the country’s largest independent cold transport trucking company.
Scott’s, which employed over 1,500 people and operated 500 trucks across the country was placed into administration on Feb. 27.
Rising Electricity Prices Another Shock for Cowch
Cowch owner Memis says the company’s manufacturing facility was costing $25,000 in electricity every quarter.Attempts were made to bring those costs down with the installation of $40,000 water chillers.
While it was initially effective, the rise in energy prices has whittled away the cost savings.
There have been warnings from major businesses that rising energy prices—particularly with the push towards net-zero—could be a motivation for companies to consider relocating overseas.
Notably, Australia’s largest brickmaker, Brickworks, said it was eyeing a move to the United States because gas prices were so much lower.
Meanwhile, Newman said governments should provide the right conditions for businesses to thrive.
“The best thing that government could do right now for business is to get off their back,” he said. “Just get out of their way and stop producing legislation, rules, regulations, and let people get on and do their best to earn a living and employ people.”
“We have benefited from opening up financial markets to competition and to more freedom and what we’ve been doing over the last few years is starting to turn the screws back the other way and make it harder and harder for people to actually get ahead.”
