Aussie Eateries Eyeing Up to 5% Surcharge Amid Soaring Fuel Costs
Australian diners might soon find their bills at cafes, restaurants, and pubs ticking up by an extra 5 per cent, as the hospitality industry grapples with the significant impact of surging fuel prices. Industry leaders are flagging that many businesses are simply unable to absorb these escalating operational expenses, particularly given that many are already navigating “razor-thin” profit margins.
The current geopolitical landscape, specifically the conflict in the Middle East, has triggered a dramatic spike in fuel prices across Australia. This, in turn, has sent shockwaves through various sectors of the economy. For the hospitality sector, this translates to a cascade of increased costs, including higher fuel levy surcharges, more expensive transport and freight, pricier refrigeration, increased delivery fees from suppliers, and escalating charges for utilities and waste management.
Wes Lambert, Chief Executive of the Restaurant and Catering Australia (R&CA), has indicated that hospitality businesses are finding themselves in a position where they “simply cannot absorb” the additional costs being passed on by their suppliers.
“The Australian restaurant and cafe industry is giving the hospitality industry permission and our endorsement to charge a 1 to 5 per cent fuel levy surcharge on cafe, restaurants and other hospitality business bills,” Lambert stated. He emphasised that businesses are being forced to pass these costs on due to a perceived lack of action from both state and federal governments in addressing the issue.
According to the Australian Competition and Consumer Commission (ACCC), businesses retain the autonomy to set their own pricing structures, which includes the implementation of surcharges or fees. However, a crucial stipulation is that customers must be clearly informed about any potential surcharges before they commit to an order or purchase. This information needs to be prominently displayed to ensure transparency.
Lambert clarified that any proposed surcharge would be intended as a temporary measure, designed to alleviate the immediate pressure of current supply chain cost increases, rather than a permanent adjustment to menu prices.
Rising Costs Hit Hospitality Venues Hard
Across the nation, many hospitality venues are now facing the reality of fuel levy surcharges or delivery surcharges being added to their invoices.
Ruby Rule, a cafe owner in Queensland, has reported being subjected to fuel levy surcharges ranging from $1 to $4 per delivery from her suppliers. “With everything going on in the Middle East right now, we’ve just been slapped with fuel levy charges from every single supplier,” Rule shared.
Running three cafes, Rule explained that these additional costs would have a considerable impact on her businesses. “When you’re making 20 plus orders a week across three businesses, obviously it does add up,” she noted.
Lambert also highlighted instances where suppliers are mandating increased order volumes from businesses to reduce the frequency of their deliveries. “Big companies, large suppliers, they are passing on the costs to their customers. It’s small restaurants and cafes around the country that are on razor-thin margins just cannot afford to absorb the increased delivery or minimum purchasing requirements,” he explained.
These financial pressures come at a challenging time for the industry, with potential further impacts looming. The Reserve Bank of Australia (RBA) is expected to release its final decision on a proposed ban on credit and debit card surcharges. Furthermore, a case before the Fair Work Commission could potentially lead to the abolition of junior pay rates, and an anticipated increase to the minimum wage is also on the horizon.
“We understand that everyone’s under pressure, but unfortunately, cafes and restaurants cannot absorb it,” Lambert stressed. He urged diners to direct their concerns towards their elected officials rather than the businesses themselves. “Diners should not be turning to businesses to complain. They should be turning to their local, MP, state and federal, who have dropped the ball on calming this storm.”
