“Unsustainable” staff costs blight restaurant industry: survey

Almost 13% of Australian cafes and restaurants are keeping their doors closed on Sundays and public holidays as staff costs reach an “unsustainable level”, says the Restaurant & Catering Industry Association.

According to the association’s 2014 Industry Benchmarking Survey, wages and other staff costs, including payroll tax and training, now account for 45.3% of total expenses for businesses in the industry.

Despite the Fair Work Commission recently reducing the 75% penalty rate for casual employees on Sundays to 50%, Restaurant & Catering Association chief executive John Hart said in a statement high penalty costs are taking their toll on the industry.

Hart said of the 12.9% of survey respondents who do not open on Sundays and public holidays, 92.4% said penalty rates were to blame.

The report also found 71% of businesses have reduced their staff hours, while 69.5% of respondents said the business owner themselves now works on the weekend as a result of the high costs of employing others.

However, the survey also found that some businesses within the sector are struggling to find skilled staff.

Just over 60% of survey respondents said they currently have vacant positions within their business, but 22.3% of these respondents said they had “extreme difficulty” filling the roles.

“Chefs, cooks and restaurant managers continue to be the most in-demand positions within the sector,” said Hart.

But Hart said if wage pressures continue, there will be fewer jobs in the industry overall.

“The café, restaurant and takeaway food sector is the single largest employer across all tourism-related sectors, employing 517,000 Australians,” said Hart.

“The results of the survey prove the impact of wage pressures will mean less job opportunities for Australians across the country.”

Peter Strong, executive director of the Council of Small Business of Australia, told SmartCompany he is hearing similar statistics from his members, and if 13% of cafes and restaurants are not opening on weekends or public holidays, that has an effect on community and culture, as well as the number of jobs on offer, especially to young people.

But Strong is most concerned about business owners being forced to work extra hours because they can’t afford to hire anyone else.

“Their health should count but it doesn’t seem to,” he says.

Strong says penalty rates in Australia are “an issue” and he believes we will see a time when a government campaigns to reduce penalty rates.

“[The government] are concerned about it, and there’s people in the Labor Party who are concerned too,” says Strong.

“But they’re all afraid to talk about it, except us and the Restaurant & Catering Association and those who are hit hard by it. They don’t want to mention it because of Work Choices.”

But Minister for Employment Eric Abetz told SmartCompany this morning the government is “deeply concerned for the employability of, in particular, young Australians”.

“That’s why we have said publicly that the Fair Work Commission in its review of modern awards should take a careful and measured approach and ensure that any decision takes into account the employment opportunities for others,” says Abetz.

Abetz says any decision on wage rates should be appropriate and also take account of Australia’s “reputation as a tourism destination and services available”.

“That said, it is up to the Fair Work Commission as the umpire to determine modern awards and that won’t be changing,” he says.

“I encourage anyone with views on modern awards to make submissions to the four-yearly review.”