$3K public holiday cost too much to bear for some cafes
The cost of a public holiday to cafe owners is around $3000 – enough to cripple many small businesses forced to pass the costs on to consumers.
Public holiday surcharges can range from 10 to 15 percent, but business owners argue they are necessary to keep the lights on.
Bramble Bay General, the Bone Yard Espresso, and Boney’s Deli owner Ruby Rule outlined the costs to Econostrum recently.
“Opening on public holidays costs us around an extra $3,000,” Rule said, while noting the 15% surcharge she charges across her Queensland venues doesn’t entirely cover the gap.
Rule told Econostrum, the $719 she made on a recent public holiday across her venues didn’t add up to the costs involved.
With her nine staff members working 55 hours during the holiday, labor costs surged to $3,500 – a significant jump from the typical daily wage bill of $1,800.
“Casual award rates can jump from $30 to $60 an hour, and full-time staff earn a day in lieu.
It’s not feasible for businesses to absorb that,” Dan Dick, who owns Born and Raised
Coffee and Nigel cafes in Melbourne, said.
Hospitality employees working on public holidays are entitled to significant penalty rates, often doubling their regular wages. Australia Day this year fell on a Sunday, with the following Monday (January 27th) designated the official public holiday for penalty rate purposes.
To offset these increased labor costs, businesses can legally implement surcharges. The Australian Competition and Consumer Commission (ACCC) mandates that customers must be clearly informed of any surcharges applied. This information is typically displayed on menus, signage, or both. While there's no upper limit on surcharge rates, most establishments charge between 10% and 15%, with some reaching 20%.
Generally speaking, the hospitality sector is currently navigating a challenging economic environment. According to CreditorWatch's Business Risk Index, the industry exhibits the highest rates of business failures, payment defaults, and significant tax debt defaults.
The average business failure rate across all sectors has risen to 5.1%, the highest level since 2020, and is projected to further increase to 5.6% in the coming year. Businesses are grappling with a confluence of factors, including elevated operating costs, increased wages, labor shortages, and softening consumer demand.
Jonathan Jackson, 28th January 2024
