Food Trucks in South Australia Discussion Paper JANUARY 2016

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RESTAURANT & CATERING AUSTRALIA Restaurant & Catering Australia (R&CA) is the national industry association representing the interests of 35,000 restaurants, cafes and catering businesses across Australia. R&CA delivers tangible outcomes to small businesses within the hospitality industry by influencing the policy decisions and regulations that impact the sector’s operating environment. R&CA is committed to ensuring the industry is recognised as one of excellence, professionalism, profitability and sustainability. This includes advocating the broader social and economic contribution of the sector to industry and government stakeholders, as well as highlighting the value of the restaurant experience to the public.

COVER PAGE: Top left and bottom right images courtesy of Tourism Australia Top right and bottom left images courtesy of the City of Sydney

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TABLE OF CONTENTS EXECUTIVE SUMMARY _____________________________________________________________ 4 STATE OF THE INDUSTRY ___________________________________________________________ 5 FOOD TRUCK GUIDELINES __________________________________________________________ 6 BEST PRACTICE: CITY OF SYDNEY FOOD TRUCK TRIAL ___________________________________________ 6 OPERATOR FEEDBACK: MAD MARCH ________________________________________________________ 7

FOOD TRUCKS IN SOUTH AUSTRALIA _________________________________________________ 8 PERMIT COSTS __________________________________________________________________________ 8 HEALTH PERMITS AND INSPECTIONS ________________________________________________________ 9 LOCATION GUIDELINES ___________________________________________________________________ 9 ALLOWABLE NUMBER OF PERMITS ________________________________________________________ 10

CONCLUSION ___________________________________________________________________ 11

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EXECUTIVE SUMMARY Restaurant & Catering Australia (R&CA) welcomes the opportunity to provide comment to the Food Trucks in SA Discussion Paper. South Australia’s food and wine industry is worth $17 billion, with cafes, restaurants and takeaway businesses contributing $856 million to the state economy. Café, restaurant and catering businesses employ 14,900 people across South Australia, making it an important economic driver for the state. The way South Australians dine is changing, with new and alternative food experiences such as food trucks becoming increasingly popular. Food trucks offer quick, simple and cost effective meal options for consumers. When effectively integrated with existing businesses, food trucks offer consumers greater choice, activate desolate precincts, and support major events and festivals. In fostering the growth of food trucks in South Australia, it will be necessary to ensure the regulatory environment is not overly complex so as to stifle innovation and entrepreneurship. R&CA would also contend that efforts to encourage new start-up businesses should not come at the expense of existing bricks and mortar operators that are required to meet the high cost of compliance associated with running a food business. While food trucks are often a staple at South Australian festivals and events, R&CA’s Mad March Member Survey revealed that poorly coordinated food truck operations during peak festival periods can negatively impact café and restaurant operators. The survey revealed 70 per cent of operators believed their revenues had been negatively impacted during the ‘Mad March’ period. Regulation guiding food truck operators will therefore need to balance the interests of newly-established mobile food trucks with those of existing bricks and mortar operators in key dining precincts. Standardised food safety inspections and ensuring food truck permit fees and quotas reflect the cost of operating in different municipalities will reduce red tape and ensure established cafes and restaurants are not unduly affected by new entrants to the market. Local councils should continue to play a leading role in determining the most appropriate vendors to operate within their LGA, based on the population size of the LGA, as well as economic development strategies of the municipality. Drawing on its experiences from the City of Sydney Food Truck Trial and its Food Truck Guidelines, R&CA would highly encourage the South Australian Government to use the learnings from existing food truck programs in other states, such as NSW, in the design and operation of food trucks in South Australia. Page 4

STATE OF THE INDUSTRY South Australia has experienced consecutive declines in café, restaurant and catering turnover as a result of reduced consumer confidence and economic activity. For the Year Ending October 2015, South Australia experienced a 5.6 per cent decline in industry turnover to $1.0 billion, the second largest decline in turnover of all states and territories bar the Northern Territory. Figure 1: SA Café, Restaurant & Catering Turnover – Year Ending October 2011 to 2015 1150.0 1100.0 1097.6

Industry Turnover ($M)

1050.0

1060.7

1000.0 1001.4

983.5

950.0 900.0 895.4

850.0 800.0 750.0 700.0

YE OCT 11

YE OCT 12

YE OCT 13

YE OCT 14

YE OCT 15

While industry data suggests people continue to dine out as frequently each month (2.6 times per month), average spend continues to decline. The average spend in non-upmarket restaurants decreased from $33.5 to $32.8 in May 2015, with the average spend in cafes down from $20.6 to $19.91. Interestingly, the categories that showed signs of growth included pubs, clubs, wine bars and fast food chains, with the average spend across the fast food category increasing from $13.0 to $15.0. This suggests a movement towards more cost-effective meal options, to which food trucks provide an innovative alternative. However, with softer economic conditions and growing competition from alternative food options, it is becoming increasingly difficult for bricks and mortar businesses to operate sustainably. To ensure cafes and restaurants are not unduly affected by the operation of alternative food options, regulation must provide a level playing field for all operators, particularly in terms of meeting the cost of compliance at a local council level.

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Food Industry Foresight, Dining Out Data - May 2015, p17

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FOOD TRUCK GUIDELINES In 2014, R&CA developed its Food Truck Guidelines: a best-practice guide for mobile food vendors. These guidelines were distributed to every mayor and local council across Australia. The document was developed in response to growing concern among café and restaurant operators of unregulated food truck operators in their municipality. The guidelines outline basic principles for establishing food trucks in each municipality, including: 

Council regulations for food trucks make it explicit that council policy is to support existing businesses in their Local Government Area (LGA);

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That the operation of food trucks be limited in their hours of operation, proximity to existing businesses, and by specifying sites for operation to mitigate the impact on existing businesses;

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That food trucks be required to comply with all applicable regulations that ‘regular’ food businesses are required to comply with; and

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That councils design, implement and adopt guidelines and regulations that food trucks must comply with in order to operate in that LGA.

While R&CA supports standardised conditions applying to food trucks across multiple jurisdictions, R&CA believes there is still a role for local councils to play in determining and approving which food trucks operate with in their municipality, based on the contribution these vendors make to the amenity and food offering in each precinct. Should a centralised body be established to manage and issue permits, consideration will need to be given with how this body interacts with local councils to determine which food trucks are suitable for which dining precincts. Further, local councils are best placed to determine the number of food trucks these precincts can reasonably bear without adversely impacting existing food businesses.

BEST PRACTICE: CITY OF SYDNEY FOOD TRUCK TRIAL The City of Sydney’s Food Truck Trial, to which R&CA was a steering committee member, provides a best practice example of how to effectively integrate food truck operators into the food offering of local government areas (LGA). The City of Sydney coordinated the introduction of food trucks into various dining precincts by limiting the number, location, and times food trucks could operate. Page 6

The controlled introduction and steady increase in the number of food trucks within designated precincts allowed the City to monitor the impact of food trucks on existing businesses, ensuring they did not cannibalise the trade of established operators. Each food truck operator was required to go through a rigorous application process, where their business concept and truck design were accessed to determine operators that truly provide unique food offerings and that were of the highest standard in terms of food design, food safety and innovation. Since the completion of the trial, the City of Sydney has approved the operation of 21 mobile food vendors to operate within the municipality.

OPERATOR FEEDBACK: MAD MARCH South Australia has seen a resurgence in food truck operations within its dining mix, particularly at major events and festivals featured during Mad March. R&CA recently undertook a survey to assess the impact of the March festival period on existing cafes and restaurants in the City of Adelaide. The survey provided qualitative evidence to aid discussion on how the economic benefit of major events could be more equitably distributed among business operators. The survey revealed 70 per cent of operators believed their revenues had been negatively impacted during the ‘Mad March’ period. Operators located in the prime business districts of Peel Street and Rundle Street even reported a decline in trade. Most operators attributed the decline to the growth of major events and the use of temporary food truck operators during these events, particularly at the Royal Croquet Club, Surrender and Garden of Unearthly Delights. More recently, the Adelaide City Council voted to limit the number of food trucks operating in the municipality, after growing concern of the impact these businesses were having on key dining precincts. The Adelaide City Council has limited the number of food trucks from 40 to 30, with the number of food trucks permitted to trade in the CBD before 6pm limited to 20. In addition, food trucks must not operate within 25 metres of an existing business, or 50 metres from an existing business of the same primary food type. Further, only six food trucks are able to trade in public squares at any one time. R&CA has supported the changes in response to ongoing operator concern over the exponential growth of food trucks in the Adelaide CBD area.

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FOOD TRUCKS IN SOUTH AUSTRALIA R&CA supports the South Australian Government’s desire to reduce red tape associated with starting and operating a food truck business, particularly across multiple jurisdictions. R&CA has highlighted below some of the key considerations in operating and reducing regulatory burden associated with food truck permits. R&CA believes some of the greatest gains in red tape reduction could occur in the standardisation of food safety inspections across different municipalities, similar to the objectives of the Food Safety Rating Scheme. This would create greater consistency across jurisdictions, providing a platform in which to reward existing and mobile food businesses. Permit costs Standardising permit costs across multiple jurisdictions would reduce red tape for food truck operators and provide greater certainty of the expenses they are likely to incur when operating their business. However, R&CA seeks to ensure that the maximum permit cost paid by food truck operators is comparable to council rates a bricks and mortar business is expected to pay to a municipality. R&CA provided similar feedback to the Tasmanian Government on amendments to the Food Act 2003 which removed duplicated registration processes for food truck operators and allowed them to trade in multiple jurisdictions. In some instances mobile food operators have been granted the use of prominent council locations during festivals and events at peppercorn rates. This creates an unfair competitive advantage over existing businesses that contribute to council revenue through the payment of rates. To ensure equality between both existing and temporary operators, the Government must ensure that permit charges reflect the true commercial value of trading in certain areas. The difficultly will be standardising the rate across multiple jurisdictions given some trade locations are likely to attract a premium (Adelaide CBD for example). R&CA also notes the suggestion of allowing food trucks to operate on state government land, notably at bus and railway stations. R&CA fully supports this idea as a way of activating desolate precincts, particularly late at night. Alternative food options in these precincts provides an opportunity to change the amenity and aesthetics of key transportation hubs. However, consideration should be given to the impact on existing bricks and mortar businesses currently leasing premises within these precincts, most notably the Adelaide Railway Station.

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Health permits and inspections One area of red tape reduction that would deliver significant benefit to operators is the standardisation of food safety/health inspections. Once a Food Business Notification has been received and an inspection has been carried out on the premises in which food is prepared and the vehicle in which the food is served/transported, this approval should be recognised across all local council jurisdictions. Differing standards and forms that currently exist across multiple LGAs precludes this from occurring. R&CA believes work undertaken as part of the Food Safety Rating Scheme may have relevance here, as the program seeks to provide a consistent food safety rating system across the state. This will require the standardisation of food safety inspection processes conducted by council EHOs. R&CA believes the Food Safety Rating Scheme may provide an opportunity to reward mobile businesses that consistently demonstrate exceptional food safety standards. R&CA has long advocated under the Food Safety Rating System that if a business continually receives exceptional food safety ratings, that they should pay less and be inspected less. This will encourage other businesses to improve as well as allow EHOs to concentrate their efforts on businesses that pose a greater risk to public safety. The incentive could apply to bricks and mortar businesses as well as food truck operators, ensuring a level playing field for all. Location guidelines R&CA supports the development of ‘location guidelines’ that clearly articulate where the operation of food trucks is permissible, similar to those implemented by Adelaide City Council. For example, food trucks in the Adelaide LGA are not permitted to trade within 25 metres of an existing business, or 50 metres from an existing business of the same primary food type. These restrictions ensure food trucks do not cannibalise the patronage of existing operators during peak trading periods. Where temporary events and festivals are coordinated by local councils, consideration should be given to providing existing businesses with first right of refusal to operate temporary food stalls/trucks in the area, given the contribution these operators make to council revenue through the payment of rates. Further, guidelines should articulate the process for trade waste disposal given food trucks by nature are mobile and likely to cross multiple jurisdictions. R&CA believes there should be a standardised process of assessment for trade waste disposal at both the preparation site and the operational site to ensure best practice.

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Allowable number of permits R&CA strongly advocates a quota be established for food truck permits in consultation with relevant local councils. The number of food truck permits should be guided by the concentration of existing food businesses in key dining precincts, along with the associated residential and working population located in that LGA. R&CA believes there should only be an incremental increase in the number of operators permitted to trade each year, as is the case in the City of Sydney. This allows the relevant council to monitor the impact of food trucks on existing businesses and amend guidelines accordingly, as well as ensure approved food truck operators diversify existing food offerings and support activation strategies in key precincts. R&CA’s concern remains that a single permit allowing food truck operators to trade wherever they choose will result in the market becoming saturated with food offerings that make minimal contribution to the dining experience, to the detriment of existing businesses and the amenity of LGAs. R&CA believes there is justification for allowing local councils to determine and approve which food trucks operate within their LGA, based on the contribution these vendors make to the amenity and food offering in each precinct, as well as their contribution to the economic development strategies of the municipality.

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CONCLUSION The resurgence of food trucks in South Australia provides new and innovative ways to experience food. With softer trading conditions and decreasing average spend, food trucks provide a cost-effective alternative to traditional food offerings. When effectively integrated with existing businesses, food trucks offer consumers greater choice, activate desolate precincts, and support major events and festivals. R&CA welcomes the Government’s Food Trucks in SA Discussion Paper in fostering growth of this sector and reducing the regulatory burden associated with starting a new business. While R&CA supports a standardised permit system in principle, the association seeks to ensure that existing cafes and restaurants are not unduly affected by the operation of food trucks in their LGA. R&CA’s Mad March Member Survey suggests that the unregulated and uncontrolled introduction of food trucks in key dining precincts can negatively impact the ability of cafes and restaurants to operate sustainably. R&CA is therefore seeking location guidelines and food truck quotas be established in consultation with local councils to provide a coordinated approach to the integration of food trucks into key dining precincts. Where a maximum permit cost is established, these fees must reflect the true commercial value of trading in certain LGAs. Food truck operators must be able to demonstrate they have the appropriate insurances, trade waste certificates and food safety checks to operate. R&CA believes there is still a role for local councils to play in determining and approving which food trucks operate with in their municipality, based on the contribution these vendors make to the amenity and food offering in each precinct. Standardised health inspections recognised across municipalities offers one area of significant red tape reduction, in line with the objectives of the Food Safety Rating Program. The Food Safety Rating Program may also provide an opportunity to reward mobile businesses that consistently demonstrate exceptional food safety standards, while ensuring a level playing field with existing cafes and restaurants that must meet the high cost of compliance associated with operating a food business.

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