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Restaurants undercut by wage and staff costs

Wages and staff on-costs including payroll tax and training have reached “unsustainable” levels and now account for nearly half of business expenses in the restaurant sector.

According to the 2014 Industry Benchmarking Report produced by the sector’s peak body, Restaurant and Catering Australia, wages and on-staff costs now account for 45.3 per cent of business expenses.

The report is based on a survey of 340 businesses covering the 2012-13 financial year and it suggests that high costs are reducing employment opportunities and business opening hours. It found that 12.9 per cent of respondents now closed their doors on public holidays and Sundays to avoid paying penalty rates.

Currently, staff are entitled to double-time-and-a-half pay rates on public holidays. In May, restaurants gained a small reprieve when the industrial umpire reduced Sunday penalty rates for casuals by 25 per cent, lowering it from time-and-three-quarters to time-and-a-half.

Restaurant and Catering chief executive John Hart said that, for a sector dominated by small businesses, labour costs were unsustainable and likely to result in restaurants closing their doors or reducing staff hours.

“In fact, the benchmarking Report revealed 71 per cent of businesses had reduced staff hours while a further 69.5 per cent of respondents indicated the business owner now works weekends as a result of weekend and Public Holiday penalty rates being enforced through the Restaurant Industry Award,” Mr Hart said.

“We cannot keep pretending the Restaurant Industry Award meets the needs of café and restaurant businesses operating in Australia. Even the most pragmatic analysis of the hospitality operating environment indicates we have a problem.”

The Benchmarking Report showed 53.8 per cent of respondents had seen their net profit decrease over the last three years, while nearly half believed their net profit would decrease over the next 12 months.

The café, restaurant and takeaway food sector is the single largest employer across tourism related industries and employs 517,100 Australians.