The winds of change

How many new taxes can the hospitality industry absorb? Is it time to pass on costs to the consumer?

All the debate now seems to have moved on from the Resources Super Profits Tax to the carbon tax, with the political winds changing every week or so. Neither tax has clear implications for the restaurant and catering industry, but I am sure we will take some of the load as the ‘front line’ to the customer invariably does.

The carbon tax, no matter how many exemptions are granted, will result in increased costs through our supply chain. The trick is how we go about passing those on. If the latest food price increases are any guide, we will unfortunately be very reticent to do so. The latest CPI data demonstrates an overall 4.3 per cent increase in the cost of food, with up to 11 per cent increases in the price of fruit and vegetables. The price of restaurant meals went up 1.6 per cent.

To some extent the small business’ desire to absorb cost increases is what saves our economy. The inflationary impact of taxes and the cost of natural disasters will not reflect in the need to increase interest rates if small businesses absorb them. The pressure comes off the economy, but squarely on us.

Most often the only way to keep selling prices the same and deal with cost increases is by business owners working more hours. Surely it is time to let the consumer pay the real price of the meals they enjoy every day.

Brien Trippas
President, Restaurant & Catering

 

 

 

 

 

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