Cash a staple on investment menus

Top-end eateries, such as Melbourne’s Cutler & Co, are booming. Many are booked out for months ahead, despite the belt-tightening elsewhere in the economy. Photo: John Gollings

Jacquie Hayes

The world may be pushing through a recession and on the brink of another financial meltdown but you’d never know it if you were trying to spend time in any of this country’s high-end restaurants.

They’re packed, and constantly so, it seems. In fact, many are booked solid through to early next year. And it’s not just because it’s the season to be jolly. It’s been this way for months, even years.

Unless you’re well connected, any attempt to get a quick reservation in a Rockpool Bar & Grill, or Cutler & Co at Fitzroy, or Sydney’s Tetsuya, Quay or Marque will probably be met with a clipped apology.

Will a late sitting do, say, around 9.30pm? Well, no, actually. It won’t do at all for those of us who just want to get on with having a good time. How is it that the top-end restaurant business is enjoying such an unmistakable boom while other areas of our economy wane? I’ve got a theory around why this is happening. And it’s not just about sitting in a design-driven room with the focus solely on the plate.

People want a bit of fun. They want to forget that they’re unlikely to see a decent bonus this year or a pay rise for years to come. It’s all about the experience and escapism.

So they go to a beautiful place – particularly a place to be seen – to enjoy gorgeous food, and share delicious wine with friends in order to get a feel-good factor that is clearly worth the investment.

And the investment required in these places can be sizeable, particularly if you’re not paying attention to the price of what you’re ordering, or get overly effusive with the wine list.

If I want that vibe, I have a list of go-to places I continually cycle through, a kind of niche where I know other people will go.

Sydney’s cathedral-like Rockpool Bar & Grill and its Riedel-bedazzled bar are favourites. Even though I once had a close association with those places, I can’t just rock up at will. No. In order to gain entree, particularly if it’s within a day’s notice, I have to contact my Special Someone. He also helped out the other night after a cold-call for a reservation for six of us to Melbourne’s Spice Temple originally yielded that 9.30pm offering I had to fix.

I wish I had a Special Someone to help me source that feel-good vibe among investment products at the moment. There are such slim pickings, and good luck finding one that will deliver.

Frankly, anything that’s going to make money at the moment works for me. That’s why cash is king, which sounds boring but, let me tell you, from a global perspective, that’s nothing to be ashamed of.

I’ve been talking to Graham Reeve, MD of family office and wealth services at the Myer Family Company, which works for 70 of this country’s wealthiest families.

He’s been travelling the US and Europe in recent months, and has returned with a new respect for the power and security of cash investments in our country compared with what his global family-office counterparts have to work with.

“Over there, if they’re looking for cash-like investments they’d use treasury bonds or bank deposits, which at the moment are delivering low to 0 per cent interest,” Reeve says. “And while you might say at least they’re safe, when you factor in inflation, they’re actually going backwards.”

Here, on the other hand, even after the four major banks acquiesced in passing on the full 0.25 of a percentage point cash rate cut from the Reserve Bank of Australia’s meeting this month, we’re still getting 5 per cent on our money, even high 5s in some quarters if you can get a special deal. In fact, the interest rate on 180-day term deposits hasn’t dropped at all, remaining at 5.8 per cent. Instead, bank margins are being squeezed.

Banks hate that, which is one of the reasons why this picture is unlikely to change too much even if the RBA continues to drop rates after it reconvenes in February. And there are two more things.

First, Australia and New Zealand Banking Group chief Mike Smith has moved to break the nexus between what the RBA does and how banks are expected to react in matching rate moves. His bank won’t make any pricing decisions until 10 days after the RBA announces its decision.

Second, banks will be less reluctant to pass on future cuts because they’re struggling with higher offshore funding costs arising from the euro mess. So they’re reduced to collecting funds locally through deposits that they can only realistically attract with higher interest rates.

Most well-monied clients, says Reeves, have already repositioned themselves to take advantage of this condition. So their wealth is being preserved, is still growing and they’re cashed up to take advantage of opportunities as improving markets start to present them.

Exactly what those opportunities might be remains to be seen, but they may well be previewed in this column. In the meantime, eat drink and be merry. Because you might as well.

The above article does not constitute investment advice. It is the personal diary of the writer.

The Australian Financial Review