Wages top expense in restaurant industry

3427177-australian-currency-over-whiteWages and staff on-costs including payroll tax and training have reached an unsustainable level that account for 45.3 per cent of business expenses, according to Restaurant & Catering Australia’s (R&CA) 2014 Industry Benchmarking Report.

The report, which was released last month, monitors key trends in business costs, profitability, and labour and skills shortages. R&CA CEO John Hart said the report is a stark reminder of how tough it is to do business in the tourism and hospitality industry.

“Wages and salaries represent almost 40 per cent of total business expenses. Add staff on-costs including payroll tax, workers, compensation, and training, and the average cost of labour has now reached 45.3 per cent.

“The survey revealed 12.9 per cent of respondents close on both Sundays and public holidays. Of these respondents, 92.4 per cent indicated they close on Sundays and public holidays due to the cost of penalty rates on these days. For a sector dominated by small business, labour costs are unsustainable and are likely to result in restaurant doors closing or staff hours being reduced,” said Hart.

He indicated that increasing cost pressures and softer market conditions continue to impact business confidence.

“The Benchmarking Report revealed 53.8 per cent of businesses have seen their net profit decrease over the past three years,” said Hart. “The number of businesses that believe their net profit will decrease over the next 12 months has also increased to 45.8 per cent. We cannot keep pretending the Restaurant Industry Award meets the needs of cafe and restaurant businesses operating in Australia. Even the most pragmatic analysis of the hospitality operating environment indicates we have a problem.”

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