Minimum wages not to blame for restaurant failures

In reference to “Freeze minimum wages or we’ll shut down, say restaurateurs” (AFR, March 27), every month probably hundreds of restaurants close down and hundreds open up.  Minimum wages have little to do with it. 

Too many wannabe restaurateurs, who have spent too long watching My Kitchen Rules, have an overly romantic view of the industry. 

This mean lots of competition that quickly crushes overly ambitious business plans, poor offerings and average management.  

Restaurant and Catering Australia would do better discouraging people from starting up new restaurants and cafes by telling them how tough it is. 

Many industries are successful, despite paying above award minimum wages.  In contrast, the hospitality industry is known for not paying minimum wages, through the use of cash-in-hand payments. This puts unfair competitive pressure on the many operators who do act legitimately.  Restaurant and Catering Australia should encourage people to dob in these dodgy operators. This would take competitive pressure off reputable operators.

As for its graph showing that Australia’s minimum wages are high compared with other countries, I congratulate Restaurant and Catering Australia on its wonderfully selective use of statistics by comparing Australia’s minimum wages against much lower income countries, such as Poland, Turkey, Greece and Hungary.  The graph also completely leaves out high minimum wage countries, such as Denmark, Sweden, Norway, Finland and Germany. 

Source:  AFR - 31 March 2014