A quarter of the way down the Great Ocean Road, where the air tastes like the sea, Bryce Newcombe is making scones and surveying the weather through a window.

"It's sunny," he says, hands kneading a giant bowl of dough.

"So we could be quiet. But if it rains, we'll be destroyed."

He tells Mike, a young man who used to work the graveyard shift at Crown Casino before being laid off due to the pandemic, to take over the dough.

Mr Newcombe moves on to prepping ramekins of butter, jam, and cream, slicing bread and opening chilled containers of cheese and avocado smash.

He looks down at his watch — 8:00am.

A woman he'd never met before agreed to travel from Melbourne for the week to be his dishy.

A local, who usually works as a light technician, was supposed to do the job but a typo in a text message meant Bryce lost him to another cafe.

"I was meant to say Monday to Friday but it auto-corrected to none to Friday," he says, painfully.

It's the second day of the winter school holidays and almost every other state in Australia has gone into lockdown.

Flights out of Victoria have been cancelled, while flights in are choked with couples and families forced to turn around and once again holiday at home.

For seaside towns like Lorne and the business owners within them, the pandemic has been a blessing and a curse.

Domestic tourism is thriving, not only making up for the lack of international visitors but creating a steady stream of revenue throughout the low season, shortening it from five months to just two.

But it's brought to the surface an issue that's been brewing for more than 20 years; there's nowhere to live, and when there's nowhere to live, there's no one to work.

Long-term rentals have either been put on the lucrative Airbnb market, or owners taking advantage of the work-from-home revolution have moved in.

When space opens up, competition is fierce. Employers enter into bidding wars for leases to secure a roof for staff they may not even have yet.

Adding to the stress is finding the staff in the first place. According to organisations crisscrossing the country, Australia is facing a hospitality worker shortage chiefly due to a lack of international workers — and, in some cases, because the staff let go last year don't want to come back.

Those that are left aren't staying in Victoria, Bryce says, instead opting for warmer climates and fewer lockdowns up north.

The result: customers desperate to get out of cities and spend are experiencing reduced restaurant hours and menus, fewer places to stay, and shuttered businesses.

Businesses 'on a tightrope'

To secure staff, employers are getting creative, offering higher pay and free accommodation.

Mr Newcombe paid $4,500 to put one of his chefs in a hotel for two weeks then lost him to a business in Rockhampton offering $65 an hour for an all-expenses paid fly-in fly-out chef, another chef left after being offered a $200,000 salary for a gig in Byron Bay, and he was out-bid for front-of-house staff by a local rival pub offering $60,000 a year — almost $31 an hour.

Forty-five minutes further up the Great Ocean Road, Apollo Bay's Chamber of Commerce conducted a survey and found there were 85 permanent positions and 113 seasonal positions not being filled because of a shortage of affordable housing, and businesses have reduced hours by 50 per cent just so their staff can have a day off. They say it's created an $11 million loss for the economy.

Mr Newcombe is in the same position, no longer opening for dinner and running out of menu items because there's no one with the energy left to prep.

Even without the dinner service, his staff are exhausted; waiter Jake, who used to work nights making cocktails, recently had his first weekend off after 14 days without a break.

Mike is learning how to be a chef on the run, and Julia, who recently quit for a new career, agreed to travel down from Queensland just to help out for the school holidays.

It's not just the restaurants that are suffering. Chris Tutungi owns Lorne Bush House Cottages and has blocked out some of the cottages on his booking website for the holidays because there's no one to clean them.

He needs four cleaners during the low season and six by summer. Right now he has two and they both make the winding three-hour round trip from Geelong everyday.

Chris says it means the losses incurred from Melbourne's four lockdowns aren't being made back, because he can't operate at 100 per cent capacity. 

Like many other restaurants, Bryce tried to pivot to takeaway last year to boost earnings and installed a $30,000 pizza oven, but couldn't find staff to make the pizzas, let alone deliver them. 

More than a third of housing on Airbnb

In the hope of putting pressure on the state government to come up with short-term solutions, the Surf Coast Shire declared the situation a key-worker accommodation crisis, and Colac Otway Shire followed suit a month later.

Both are asking the state government and Great Ocean Road Coast and Parks Authority to step in to loosen planning protocols and zoning requirements so they can open up more land and use existing camping grounds and people's backyards for caravans, tiny houses and portable homes.

A report by the Victorian Planning Authority last year found almost 4,000 jobs were being filled by people living outside the Great South Coast and Barwon regions, and another 2,600 jobs were expected to be created over the next three years.

The report made a range of recommendations to boost housing supply including by reducing stamp duty for over 65s, making it easier for visa holders to purchase property, creating another bus network between Geelong and Surf Coast towns, and creating a trust for any land rezoned residential to be earmarked for worker housing.

While the report gave a detailed account of the actions that could be taken, Surf Coast Shire councillor Gary Allen says none of it is happening fast enough. 

"The state government was very quick to act after last year's lockdown to allow businesses to have outdoor dining," he says.

"Why not act just as quickly to look at the planning requirements and fill the hole for short-term and [cheaper] rental accommodation."

A government spokesperson said it would "consider any amendments to local planning schemes proposed by councils on their merits".

"We have already cut red tape on approvals for small-scale accommodation on the same lot as an existing dwelling through our Smart Planning reforms. And we've provided $20 million for Surf Coast Shire … under the Big Housing Build," they said.

But locals fear it's unlikely a solution will be found before summer.

Bryce relaxes slightly when the Melbourne woman walks in, just as the morning rush begins. She checks in with the government QR code and is given a crash course in how to use a commercial dishwasher.

Just as she gets her bearings, Jake, grabbing plates of eggs and bowls of granola from the pass, tells the kitchen another eight tables just arrived.

"It's Armageddon," Mr Newcombe says.

A family of five try their luck for a table but are turned away — no room.

By 10:45am power walking has turned into running.

Dockets spill out of the machine, flat whites and lattes crowd the bar, dirty water glasses wait for a wash in another room next to half-empty water jugs needing a top-up.

In the kitchen, Mr Newcombe pours bowl after bowl of granola while almost simultaneously cracking a dozen eggs into a steaming pot of water and shouting orders at Mike about breakfast burgers and where to find more gluten-free bread.

If just one staff member hadn't turned up, Mr Newcombe says, he would've closed. Last year, when one of his chefs had to get a COVID test, he shut for two days.

When he's desperate, Bryce uses agency chefs and dishwashers but they don't come cheap.

By 11:00am, any time for chit-chat between staff has been swallowed by the demand to take orders, ring them through, deliver coffee, then food, thank the customers for stopping by before clearing sticky plates and cutlery for hungry customers waiting at the door.

By 11:30am, 150 meals, hundreds of coffees, and a few dozen hot chocolates later, breakfast is over. Come summer, those numbers will more than double.

For half an hour, the staff play catch up; they wipe, stack, polish, throw back a coffee, munch on a scone.

Mr Newcombe makes sure they're all okay, do they need anything? How are they feeling? He worries every day that Jake might leave. 

"I've been making him get up every day at seven o'clock and work until six o'clock at night," he says.

"He's doing 11 hours a day, every day, at a time he doesn't want to work."

He throws a chequered tea-towel over his shoulder and looks up at the clock.

Ten minutes until 12:00 pm, and then, the lunch crowd.