‘People just don’t have the money’: Award-winning Melbourne baker reveals ‘big shift’ as cafés left ‘struggling’

Mounting operating overheads, relentless supply chain increases, and growing regulatory burdens are pushing Australia’s small business sector to the brink, forcing independent food operators to radically rethink how to keep their businesses alive.

For Nick Williams, a chef of 30 years, that meant pivoting his career path into wholesale and retail baking.

Cash-strapped Australians are abandoning expensive café breakfasts and restaurant meals, opting to invest in premium goods so they can recreate quality meals at home for a fraction of the price. It marks a distinct shift in consumer behaviour that is reshaping everyday dining.

Williams, the owner of Melbourne’s Backhaus, says this transition from dining out to eating in has become a defining trend of the current economic climate.

He says he’s noticed a big shift in people who once spent $40 on bacon and eggs with a drink now trying to recreate that experience at home.

“They still want that treat, but people just don’t have the money to drop that they had even a couple of years ago.”

Williams, who spent 30 years working as a chef before pivoting to wholesale sourdough and retail baking four and a half years ago, recognised early on that standard restaurant operations were becoming financially unviable.

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“Just the cost of goods, and the hurdles this government continually puts small businesses through. Bread seemed to be the option, and you can still make something you’re really proud of.”

While consumer demand for quality daily staples like sourdough has surged as shoppers seek value at home, still operating a small manufacturing and retail business has never been more punishing.

He points out “endless hurdles” like taxes, the cost of goods relentlessly climbing, logistics and the rocketing price of fuel.

The compounding pressure of shrinking household budgets and soaring business overheads is visibly gutting once-thriving hospitality hubs across Melbourne.

“I think it’s drawing small business owners together, bonding us together, because you need to emotionally support each other, ’cause it’s really bloody hard,” Williams said.

“I’ve just come back to Melbourne after being away for a long time, four and a half years ago, and never in a million years would you think you’d see a vacant shop on Brunswick Street in Fitzroy.

“And coming to Lygon Street... It’s really sad. You see these amazing places that used to be hospitality hubs just really struggling, and there’s only so many corners these people can cut before they have to close their doors.

To meet shoppers where they are and provide genuine value, Backhaus has structured its network across an artisan food store in Essendon, a factory shopfront in Airport West, and a new grab-and-go location on Lygon Street that opened just two weeks ago.

“We wanted to do something a bit special,” he said. “Our main focus is to keep a medium price point, so people can get something special as a treat and it’s still affordable. It’s a real focus of ours.”

Rather than chasing steep profit margins on single luxury items, Williams deliberately absorbs overheads across his product lines, serving premium Wagyu marble score 9 smoked brisket toasties with house-made kraut and pickles for $17 to $18, paired with $4.50 small skim cappuccinos and Allpress coffee.

“Our whole focus isn’t on selling toasties. If our whole business was toasties, we’d review it differently. But because we sell coffee, and we sell whole bread and pastry and toasties as an addition ... people don’t just come in and buy one thing, they buy four.

“So if we can absorb the price on one of our lines to offer value, we have a better chance of a customer trusting our brand and buying a loaf of bread in the supermarket and a toastie from our store.”

That dedication to wholesome, slow-crafted staples saw Backhaus take home major honours at the 2026 Melbourne Royal Australian Food Awards. Its 48-hour fermented house sourdough won a gold medal and best in class, while its specialty seven-fruit loaf which packed with whole apricots, cranberries, dates, figs, sultanas, currants, and raisins without any added spices took out a gold medal, best in class, and best in class overall.

“It has triple the fruit of most fruit breads. It’s small, its dense, but it’s super moist. So a lot of fruit breads will just use sultanas or raisins, and then they’ll add a whole heap of cinnamon in there to give you this idea that it’s a fruity bread, but it actually tastes like nothing. It’s a real treat. A lot of people say, ‘Oh I hate fruit bread, but I love yours’.”

With loaves stocked across independent grocers and supermarkets statewide including La Manna, Happy Apple stores, Ritchies, and independent IGAs, Williams maintains that small business survival hinges entirely on staying grounded in the local community.

“Our mission statement for Backhaus holistically is tradition, progression, community. So we’re very community focused, and we gift to charity 365 days. We gift to Helping Hands, which is an amazing charity, every day. Us and La Manna are key supporters of them.

So we wear our heart on our sleeve, we actually mean it.”