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Wages, training costs the top expenses in restaurant industry

18 August, 2014

Wages and staff on-costs including payroll tax and training have reached 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 monitors key trends in business costs, profitability and labour and skills shortages.

R&CA CEO John Hart says the report is a stark reminder of how tough is it 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," Hart said.

"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.

Unsustainable labour costs


"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.

"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," Hart said.

Hart indicated 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. 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 have a problem"

"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 café, restaurant and takeaway food sector is the single largest employer across all tourism-related sectors, employing 517,100 Australians. The results of the survey prove the impact of wage pressures will mean less job opportunities for Australians across the country.

"This will have catastrophic impacts on the sector, including reducing the nation's ability to reach its Tourism 2020 target of doubling overnight visitor expenditure to $140 billion by 2020," said Hart.

Hart said cost pressures weren't the only concern of the sector, citing 60.8 per cent of respondents currently have job vacancies within their businesses. Of these businesses, 22.3 per cent indicated they had extreme difficulty finding staff.

"Chefs, Cooks, and Restaurant Managers continue to be the most in-demand positions within the sector. Securing the inclusion of Chefs of the Skilled Occupation List was a huge win for industry in addressing some of the current labour shortages experienced by industry.

"It also goes to prove the importance of programs the Skills Pathways Project to encourage a greater number of Australians to participate in the sector," Hart said.

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