April 28 (Bloomberg) -- The Gardener’s Lodge Cafe in Sydney’s Victoria Park has polished wood floors, Aboriginal art on the walls and customers tucking into kangaroo-stout pies and sipping on macchiatos. All this betrays none of its past: The 125-year-old sandstone structure used to be a public toilet.
“It doesn’t put me off, it just adds a bit of character to the place,” Ben Andersen, 32, said over a cappuccino and apple crumble among the outdoor tables of the cafe, which was converted two years ago after three decades of disrepair. “I’d never have guessed it used to be a toilet.”
Following a handful of such conversions over the past few decades, several more may be on the way. The City of Sydney this month adopted a Public Toilet Strategy that earmarked three more shuttered historic facilities. As spending at eateries grows at double the pace of all Australian retail sales amid worsening consumer confidence, the unused sandstone structures offer would-be restaurateurs prime locations with unique history.
Gardener’s Lodge, built in the late 1880s as a residence for the University of Sydney’s groundskeeper, was converted to toilets in 1911 and served the public until the mid-1980s when they were closed.
“These buildings are very sturdy and can put up with a lot of alteration, so there’s no need to demolish them if you can use them for another purpose,” said Murray Brown, Sydney-based adviser for the New South Wales chapter of the Australian Institute of Architects.
The three facilities the city is recommending for conversion are in prime locations: a toilet block built into cliffs on Hickson Road, a 10-minute walk from a A$6 billion project of office towers, luxury apartments and casino being developed by Lend Lease Group; decommissioned 1930s restrooms in Belmore Park near Central station; and an early 1900s public urinal-turned-electricity substation at Taylor Square on Oxford Street, along which the city’s annual Mardi Gras parade travels.
“In the past, the City has called for expressions of interest to find the most appropriate use for similar, disused facilities,” Matthew Moore, a spokesman for the City of Sydney said by e-mail. The council has received “a number of enquiries to convert these old toilets into cafes, so there is clearly interest.”
While the Toilet Strategy report estimates the conversion costs at A$850,000 ($788,460), it hasn’t earmarked city funds this time.
The city spent more than A$1.2 million to restore the Gardener’s Lodge exterior, windows and doors, repair its roof, and outfit the interior, according to the websites of the cafe and Sydney Lord Mayor Clover Moore.
In October 2012, Wendy Johnsson and Aboriginal elder Beryl Van-Oploo opened the eatery at the site, near a former Aboriginal meeting place, with a goal of helping indigenous people’s participation in employment.
“If you don’t grab the opportunities with both hands, they won’t happen,” Johnsson said. “As much as it’s a beautiful building, and I don’t want to put a negative slant on it,” she cited challenges due to the building’s size requiring table space outdoors and its distance from other destinations.
Australia’s vibrant coffee culture, along with the relative outperformance of convenient, affordable eateries compared with other retailers, is driving the growth of cafes, said Stephen Gargano, Melbourne-based analyst at industry research firm IBISWorld Inc.
With the number of cafes and coffee shops in Australia forecast to climb to 9,783 by mid-2019 after increasing more than 20 percent in the past five years to 8,570, according to IBISWorld, standing out as a historic toilet could be what keeps a cafe alive, said Craig Reid, a Sydney-based business consultant and author of The Complete Guide to Buying a Cafe.
“There’s a high level of competitiveness in the industry,” Reid said. “There might be an initial sense of revulsion, but if it’s done the right way, people will soon stop thinking of them as toilets.”
In Sydney’s center, overlooking Hyde Park and connected to St. James railway station, another converted heritage-listed sandstone public toilet has housed French bistro Metro St. James for the past year. The eastern part of the station, built in 1926, included toilets before being converted to cafe use in the 1990s, according to the City of Sydney’s website.
Sales at cafes, restaurants and from catering services grew almost 14.5 percent in the year to Feb. 28, almost triple the increase in total retail sales, government figures show. That came as consumer sentiment remained below 100 for a second month in April, indicating pessimists outnumber optimists, according to a survey by Westpac Banking Corp. and Melbourne Institute.
“Coffee is an affordable luxury even during a period of restraint,” Gargano said. “Repurposing of these toilet blocks offers the opportunity to find a great location, and that’s one of the most important determinants of a cafe’s success.”
The cafe and coffee-shop businesses’ contribution to Australia’s gross domestic product has been growing at 4.5 percent annually since 2009 and will keep that pace for the next five years, according to IBISWorld. It added A$1.3 billion to the economy in the year ended June 30, with its contribution set to grow to A$1.5 billion by fiscal year 2017, according to company forecasts.
Not all succeed. U.S. giant Starbucks Corp. has struggled in Australia. It expanded quickly after entering in 2000, shuttered 61 underperforming stores across the country starting in 2008, and now operates 23 outlets in Sydney, Melbourne and Brisbane. The company said Australia underperformed its international operations.
“Australia is first and foremost an independent cafe market,” said Sissel Rosengren, head of food service at research firm BIS Shrapnel Pty.
While inexpensive restaurants and cafes on busy streets see lines out the door at mealtimes, celebrity chefs’ luxury restaurants have suffered. At Westfield Group’s downtown Sydney mall, Justin North’s Becasse and Alessandro Pavoni’s Pizza Six have closed in the past two years.
The crumbling toilet blocks the city wants to repurpose could be as successful as his Sydney Cove Oyster Bar, said Philip Thompson, whose 63-square-meter (678-square-foot) waterfront eatery, overlooking the Sydney Harbour Bridge, was converted from public facilities in 1988.
“A lot of toilet blocks built in the early 1900s were designed beautifully,” said Thompson, who, along with Barry Manton, holds about 75 percent of the Oyster Bar. “If they can put a cafe in there, why wouldn’t they? You’re making use of the infrastructure that’s already there, and it generates income for the city.”
While it’s been profitable since its second year, Barry Manton, who holds 75 percent of the Oyster Bar with Thompson, said multiple agency approvals, construction delays, and costs three times higher than expected, at A$240,000, means he wouldn’t do it again.
Other cities have cafes with similar pasts. Central London boasts the Attendant cafe in a former Victorian toilet built around 1890, where original porcelain urinals serve as booth separators. Also in London, a cocktail bar called Ladies and Gentlemen was due to open this year in a disused underground lavatory complex in Kentish Town in the city’s north.
Electricity substations, offered by landlords who bought them from the New South Wales state electricity providers, are also drawing entrepreneurs. Catering business owner Ram Stern opened Substation Cafe in September 2012 in Alexandria, a warehouse district four kilometers (2.5 miles) south of Sydney’s center, which has experienced an 18 percent surge in population between the 2006 and 2011 censuses as new apartment buildings popped up.
Stern said he might consider converting the Taylor Square substation listed in the city’s Toilet Strategy report.
“These buildings are really, really good compared to what people build now,” he said. “I won’t hesitate to buy another one.”
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