Parmas, Patrons and Power Players: The New Economics of the Australian Pub Scene

Australia’s pub market is serving up something very different this year, as menu prices climb, regional hotspots boom and banks show a fresh thirst for lending.

CBRE’s new Raising the Bar - Investment & Innovation in Australian Pubs report has revealed the forces driving competition and investment strategies across the eastern states.

We spoke to CBRE Research Analyst Katya Ezhova and Senior Director Hotel Valuations Kire Georgievski about the implications for investors jockeying for position in one of the country’s most tightly held asset classes.

Victoria has taken the top spot for pub dining prices, according to CBRE’s Pub Grub Indices — an analysis of 105 venues across New South Wales, Victoria and Queensland.

NSW follows closely, while Queensland remains the most affordable of the eastern states.

“Melbourne’s dynamic dining culture sets the tone for Victoria’s pub scene, where patrons actively seek elevated experiences rather than basic fare,” Ms Ezhova said.

“This appetite for quality translates into higher menu prices compared to NSW and Queensland.”

The most expensive venues are overwhelmingly those that have completed recent refurbishments, highlighting “a strong correlation between capital investment and premium menu pricing.”

Regional Australia is experiencing some of its strongest population growth in a decade, with 2023-24 marking a surge driven by lifestyle relocations and decentralisation.

Coastal NSW, South East Queensland and regional Victoria are capturing the lion’s share of new residents, and local pubs are reaping the benefits through rising patronage and higher spend.

“These venues are becoming key social and economic hubs, reinforcing the strength of the regional hospitality sector,” Ms Ezhova said.

Domestic tourism is amplifying the trend.

“Pubs that align with tourism strategies, such as those on pub trails, near natural attractions or offering boutique experiences, are especially well-positioned to capture visitor spending,” she said.

Hospitality spending may be up 72% over the past four years, but operators remain squeezed by escalating costs, labour shortages and tightening regulation.

Ms Ezhova said persistent labour gaps and rising energy, insurance and food costs are eroding margins, particularly for smaller pubs without scale advantages.

Regulatory change is another challenge.

“Overall, across NSW and other states, gaming regulations are tightening with a strong focus on harm minimisation,” she said.

“Measures such as mandatory Responsible Gambling Officers, trials of cashless gaming systems, and restrictions on ATM access and setting gaming expenditure limits and potential operating hours are reshaping operational requirements.”

Alcohol and gambling compliance rules — including lockout laws, last-drink cut-offs and expanded self-exclusion programs — are further increasing costs and demanding stronger systems and staff training across the sector.

One of the sharpest shifts in the report is the resurgence of traditional bank lenders, particularly for pubs with stable cash flows and strong gaming entitlements.

This renewed access to credit is intensifying competition between private investors and syndicates, underpinning valuations and drawing new players back to the table.

The momentum comes at a time when interest rates have stabilised, supporting modest asset value growth.

“This has led to increased banking options and therefore competition for those in the pub industry or those who want to get into the pub industry,” Mr Georgievski said.

“This has led to further valuation requirements as these entrants require valuations.”

Despite heightened interest from institutional and syndicate-backed buyers, the pub landscape remains firmly local.

Venues with five to 19 employees represent 28.3% of all operators nationwide, while owner-run pubs account for a further 27.8%.

At the other end of the spectrum, just 0.4% of pubs employ more than 200 staff - a reminder that scale is the exception, not the rule.

“For investors, the sector’s fragmentation creates scope for roll-up strategies or portfolio aggregation, which can unlock efficiencies and brand leverage,” Ms Ezhova said.

“There is also a value-add potential so investors can drive returns through capital improvements and operational enhancements, as these correlate strongly with higher menu pricing and improved margins.”