Diners face 5% surcharge as petrol costs squeeze restaurants and cafes
The Australian Restaurant and Cafe Association (ARCA) is calling on restaurant and cafe operators nationwide to introduce a five per cent surcharge — equivalent to $5 on every $100 spent — across breakfast, lunch and dinner services, as escalating fuel-related costs erode already razor-thin margins.
The proposal adds yet another financial pressure on consumers navigating a difficult cost-of-living environment, with interest rate hikes and elevated everyday expenses already weighing heavily on household budgets.
ARCA chief executive Wes Lambert said the conflict in the Middle East had driven up transport, freight, refrigeration, supplier delivery, utilities and waste collection costs for venues that were already under strain.
"Fuel touches everything in hospitality — every delivery, every supplier, every ingredient and every collection truck that pulls up behind a venue," he said. "If government won't stabilise costs, businesses must be allowed to survive them."
Lambert said suppliers had begun passing on their own fuel charges directly to hospitality businesses, with the situation deteriorating quickly.
"This is happening rapidly as petrol stations around Victoria, NSW begin to run out of diesel … what we're hearing from restaurants and cafes and some pubs around the country is they are now being hit with a fuel surcharge."
Celebrity chef Shane Delia has thrown his support behind the measure. Speaking to the Herald Sun, Delia acknowledged the industry's longstanding tendency to absorb costs rather than pass them on, but said the current situation was unsustainable.
"The fact of the matter is that as an industry we absorb the bottom of the food chain all the time and we find it really hard to pass on anything," he said.
"We're not saying we need to put a percentage or a charge indefinitely, but while there's obviously a pinch and the government is refusing to budge and support us, I mean, we are not the Salvation Army," he said.
Delia stressed that a collective, industry-wide approach would be critical to the levy's success, warning that operators going it alone risked customer backlash.
"It has to be a united thing where restaurants actually decide to actually stand up for the community and do things together," he said. "If I'm the outlier … it's gonna be a double-edged sword because I might be able to recoup a little bit of money to pay for some of these levies, but I'm gonna get retaliation from my customers.
"And the reality is that we're in the hospitality industry. We wanna be hospitable. We don't wanna be aggressive but there comes a point where it's just not serviceable anymore."
Lambert highlighted the vulnerability of hospitality businesses, noting the sector operates on some of the slimmest margins of any industry.
"We have such low profit margins as it is — 2.6 per cent for cafes and 2.8 per cent for restaurants, which keep on absorbing the world's problems," he said. "So the association is calling on the industry to join together and rather than absorb the cost burden, introduce a fuel surcharge."
The ARCA chief warned that without relief, venue closures would accelerate, with lasting consequences for local communities. He framed the proposed surcharge as a stopgap measure rather than a permanent price increase.
"The temporary Fuel Levy Surcharge is designed as a transparent survival mechanism to help small businesses manage extraordinary supply-chain cost pressure while maintaining jobs and service levels.
This is not about raising prices permanently. It is about keeping doors open, keeping staff employed and giving small hospitality businesses a fair chance," he said.
Jonathan Jackson, 26th March 2026
