The Fair Work Commission wage panel is considering the ACTU’s claim for a record 7 per cent increase in minimum and award wages for 2.6 million workers.
Menu prices to rise
Restaurant and Catering Association chief executive Suresh Manickam, who has called for an increase of no more than 3 per cent, warned that the commission’s decision would “directly impact the viability of hospitality businesses and the future of gastronomy in our nation”.
Mr Manickam told the minimum wage hearing on Wednesday that the group’s industry benchmarking report found 84.3 per cent of operators were considering a further rise in menu prices due to the potential increase in wage costs.
“This emphasises the risk of a wage-price spiral that threatens the economic conditions and viability for the hospitality industry,” he said.
“Major price hikes across the sector would become unavoidable, further impacting consumers.”
Mr Henderson said profit margins for cafes and restaurants were averaging just 5 per cent or less, and he expected margins to get even tighter.
He said he had been working full-time at the Gold Coast cafe since it opened nine weeks ago but still “had not been able to draw a wage yet”.
Higher wage rises would mean further pressure to close on weekends, particularly in Queensland which he found was less accepting of a 10 per cent weekend surcharge.
“We’re trying to balance the good service customers expect but also trying to be profitable,” Mr Henderson said.
“We’re probably running at 40 per cent less than what we would like to to give the service we want to give … we’re just pushing everyone harder.”
His struggles echo a restaurant in Cairns whose manager last week said she had to close on Sundays this year as the high penalty rates made business unviable and her wage bill climbed to 40 per cent of total costs.
Catherine Pacey, of Wild Thyme, said she had to make the decision in December to close on Sundays “simply because wages on Sundays are quite large”.
The FWC wage panel is expected to deliver its decision next month, with the increase to take effect on July 1.