Hospitality sector braces for price hikes as wage rise adds to industry pressure
Australian restaurants and cafes are warning of significant menu price increases and business failures following the Fair Work Commission's latest wage determination.
The 4.75 per cent modern award wage increase takes effect on July 1.
Australia's restaurant and cafe sector is sounding the alarm over a wave of compounding financial pressures, with operators warning customers should expect higher prices.
The Fair Work Commission also lifted the national minimum wage by 6 per cent, a move Employment Minister Amanda Rishworth defended as "a very responsible wage increase" for the country's lowest-paid workers. But for many hospitality operators already stretched thin, the timing could not be worse.
Wes Lambert, chief executive of the Australian Restaurant and Cafe Association, told the AFR that the wage rise is arriving alongside several other cost pressures: Payday Super changes, the phase-out of junior pay rates, and the removal of credit card surcharges. He says this will create a financial burden that may force operators to lift menu prices by at least 10 per cent this year just to preserve margins.
Sydney chef and restaurateur David Bitton, who operates the French cafe Bitton in Rose Bay, estimates the July wage rise alone will add $1,200 to his weekly $25,000 payroll — an annual increase of around $64,000 including superannuation. Factor in an expected $40,000 to $45,000 annual hit from the end of credit card surcharges in October, and the pressure to pass costs on to customers becomes unavoidable.
"I'm going to have to find a way to recover. Who's going to recover that? Customers. The problem with that is small businesses like us … we are shit scared to put our prices up," he said.
Ravi Singh, owner of the Cajun-style seafood chain Kickin'Inn, faces an even steeper bill — the wage rise will cost his business an additional $1 million annually.
Singh told the AFR he plans to test selective 5 per cent price increases from July, but remains cautious about pushing further given already-strained customer spending habits.
"The whole industry is facing the pain, and it seems that the hospitality industry has never actually recovered post-COVID," he said.
Singh said the shift in customer behaviour is already visible.
"Those eggs and breads that we buy now are going to become so expensive that people are going to start cooking at home, and I'm facing that now," he said. "We used to have a return visit of customers about two-and-a-half times per month. Now we see one per month."
He added that some operators are already preparing for price rises of up to 15 per cent to recoup costs.
Jonathan Jackson, 10th June 2026
