Cafes in Australia aren't what they used to be 30 years ago: Boss delivers brutal takedown of bleak reality facing the country

Published: 06:28, 4 August 2026 | Updated: 06:28, 4 August 2026 A veteran cafe owner has revealed he would not open a business today as he slams the mounting operational costs that are squeezing employers around the country.  Gerardo Barrios moved to Australia from Ecuador 30 years ago and opened Don Adan Coffee in Cremorne on Sydney's Lower North Shore, but he says small businesses are now facing their toughest challenges yet. 'When you're dealing with rising wages, utilities and supply costs all at the same time - every extra dollar is money that could help a local business grow and employ people,' he told news.com.au. Asked whether he would open his cafe today if starting from scratch, he said: 'No.' 'The short answer is, if I knew what I knew and I never had a friend, I wouldn't open,' he added.  Small businesses have seen costs surge by more than 25 per cent since the Covid-19 pandemic, according to a small business cost pressure index by AMP Bank.  The inaugural data, published on Tuesday, showed the weighted cost of keeping a small business open has risen from 100 in March 2020 to 124.6 by March 2026. 'Australia has more than 2.7 million actively trading small businesses - from cafes and salons to local retailers, sole traders and tradies,' AMP Bank GO Director John Arnott said.  Don Adan Coffee owner Gerardo Barrios says it is a challenging time for small businesses  Business costs have soared nearly 25 per cent since the Covid-9 pandemic, according to AMP Bank data  'Behind the price of a coffee, haircut or call-out is a long list of costs most customers never see - wages, rent, power, fuel, insurance, tools, packaging and payment costs. 'Small businesses are caught in the middle. Their own bills keep rising, but their customers are watching every dollar.  'Many have absorbed as much as they can, but there comes a point where those costs have to show up somewhere.' AMP Bank's GO Small Business Cost Pressure Index tracks changes in a weighted basket of common small business operating costs and is designed to show cost pressures facing small businesses across Australia.  The report found that since 2020, insurance costs have surged by 50 per cent, interest repayments have climbed by more than a third and wage costs have increased by 20 per cent.  But, for many small businesses, especially labour-reliant businesses such as cafes, salons, trades and services, the data showed wages are the largest single cost.  New rules introduced on July 1 increased Australia's national minimum wage to $26.44 per hour or $1,004.90 per week. There have also been changes to superannuation payments which mean workers will now receive their super contributions at the same time as their wages. Mr Barrios’ cafe has faced significant increases in costs, including soaring prices and rising insurance premiums  Mr Arnott said business owners, like Mr Barrios, have shared stories of unprecedented challenges over the last year. 'They are telling us stories like, "This is the first time I've had to employ an apprentice, this is the first time since I've owned the business that I've had to let someone go",' he said. 'This is the first time they've had to really question whether they can keep their doors open. 'Behind every small business is an owner making difficult decisions every day about staffing, investment and their own financial future.' Mr Barrios said he has experienced wage pressure, which has gone from about a third of total costs to more than 45 per cent. But he insisted he is working with suppliers to find ways to offset them. 'Rather than just raising the price, we have to look at ways that we can maintain high volumes that will make sure that we have consistency of sales,' he said. 'And then we can go to our suppliers and say, look, I'm doing this many coffees. This is how much value I can bring to you.  Mr Barrios said he has experienced wage pressure, which has gone from about a third of total costs to more than 45 per cent 'You surely can give me a five per cent discount.' Despite the challenges, Mr Barrios is fighting to provide a community space for locals. 'There are people around me that live alone. The only time they communicate with someone is when they come here, have a coffee and mingle with us or the people that I introduce them to at the cafe,' he said. 'I'm going to provide a space for you to have a good life and all we want you to do is support us. 'This is the value we bring to the community but we're going to be one of the very few coffee shops still providing this space as we are disappearing.