It was a "heartbreaking" situation for businesses coming out of the COVID-19 pandemic, the state's small business commissioner Lynda McAlary-Smith said during her visit to the region this week.

Pippies by the Bay owner Mandy Stoddart said while she would be open seven days for lunch and dinner during May Race week, she had been forced to scale back the business because of the lack of staff.

"We've had to totally re-look at our business. We are no longer seven days a week. We've had to go to five days because you can't get staff," Mrs Stoddart said.

"We are going to open up seven days for the May Races of course, and Mother's Day.

"It's tough. It's really tough. I have no words. Honestly, I've never ever seen it like this. I've been in hospitality about 35 years and never seen it like this. It's just incredible.

"We look at ourselves as the lucky ones because some people have had to close."

Mrs Stoddart, who runs the business with her husband, said they used to do breakfast, lunch and dinner over seven days, they now only do lunch and dinner five days.

"We've cut it back that much. It's just so sad," she said.

"You have to make the hard decisions to keep yourself going."

She said the same staff who worked over lunch also did dinner, and closing two days a week allowed them to have days off.

"The last eight weeks David has been in the kitchen cooking alone with a dish-hand," she said.

They lost the second chef and two apprentices during the pandemic and they haven't been able to replace them.

She said people lost faith in the industry because they were the first to be closed during a lockdown and the last to have restrictions lifted.

Ms Stoddart said they could have filled the restaurant four times over every night during the past two weeks of holidays but without staff they had to restrict numbers.

She said during May Race week they wanted to showcase Warrnambool, but they were struggling to fit customers in.

"It's a really hard situation," she said.

Warrnambool Racing Club operations manager Kate Lindsey said they had been lucky to fill their vacant staffing positions at the track for the carnival but just "in the nick of time" over the weekend.

But Ms Lindsey said they were always just "one outbreak away" from being short-staffed and were hoping to pick up extra staff for Thursday's event.

Hotel Warrnambool's Steve Phillpot said he hadn't had a new application for vacant positions for two months.

He said they didn't have enough staff to operate a "normal week" let alone a race week, but they would struggle through.

Rafferty's Mark McIlroy said the shortage was "absolutely crazy" and he hadn't seen anything like it in his 30 years in the industry.

He said, like everybody, they would be running short of staff during May Race week but they would get through.

"It won't be to the levels we would normally like. We just have to work harder and longer at the minute," Mr McIlroy said.

"I'm not sure what the answer is."

He said it was exciting they expected the carnival would be the biggest ever, but it was frustrating hospitality would be pushed to its limits.

Bojangles owner Simon Mugavin said they were "not overflowing" with staff but they had enough to get by and they were always looking for more workers.

Ms McAlary-Smith said it was heartbreaking for businesses not to be able to open.

"They're making the tough decisions to shut business to look after their staff because they are being worked into the grindstone," she said.

Ms McAlary-Smith said mental health was also raised as a major issue - the toll of a long couple of years not just for staff but for small businesses owners.

"What I'm finding in the regional communities, it's a bit amplified. Sometimes people feel like they can't put their hand up and say they're struggling and they really need to," she said.

Ms McAlary-Smith said there was free counselling available and support at business.vic.gov.au to get help find staff and job subsidies of up to $20,000 were available.

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