Pubs, restaurants, and cafes throughout regional Australia are poised to maintain public holiday and weekend surcharges for the foreseeable future, as escalating operational costs outweigh the potential risk of alienating budget-conscious customers.
The Melbourne Cup public holiday, celebrated on Tuesday in Victoria, offers a day off for countless employees in larger companies, while placing significant pressure on small business owners who face challenging financial decisions.
For many establishments that are obligated to pay holiday penalty rates to casual staff, a slow day of trade could result in losses. Conversely, imposing surcharges to offset these costs carries its own risks, as customers may choose to take their business elsewhere.
This delicate balancing act is particularly evident in Bright, a picturesque town in Victoria’s northeast that attracts numerous visitors during the Melbourne Cup holiday.
In the surrounding alpine region, many local venues have implemented a 15% surcharge on public holiday bills, with some extending 10% surcharges to Sunday services, making additional fees a consistent aspect for weekend patrons.
Bruce Hore, an executive member of the Bright Chamber of Commerce, which advocates for the area’s hospitality, retail, and tourism sectors, spoke with SmartCompany about the limited options available to local traders trying to profit during the holiday.
“Casual employees can earn between $60 and $70 an hour during this period,” Hore noted. “You could adjust your menu prices to account for that expense, but then you risk becoming uncompetitive during other times.”
Some business owners have opted not to schedule casual staff at all, choosing instead to personally manage the kitchen, counter, and coffee machine to circumvent high penalty rates.
“If you stroll down Bright’s main street today, you’ll see many mom-and-pop business owners working the shops themselves, which is how they manage to avoid those steep penalty rates,” Hore explained.
For businesses unable to raise menu prices or forgo casual staffing, the remaining options are to impose a surcharge or close, missing out on potential profits from the influx of tourists.
“Once you reach a medium-sized business with eight to ten casual employees, passing these added costs onto consumers is often the only viable choice,” Hore stated.
Broader Trends in Regional Hospitality
Bright’s situation reflects a nationwide trend, with hospitality businesses across Australia increasingly adopting surcharges in response to growing operational expenses.
Late last year, the Pavilion restaurant in Geelong gained national attention for implementing a 10% ‘peak season’ surcharge during the Christmas trading period, which now includes a 20% surcharge on public holidays. A representative for Pavilion, part of Only Hospitality Group, defended the surcharge to ABC, explaining that the business has had to provide housing for staff who relocated from Melbourne during the busy summer season.
Many regional establishments aspire to convert their casual employees into permanent positions, which could help mitigate wage expenses on weekends and public holidays. However, Hore noted that the seasonal nature of the customer base and the allure of temporary snow-related employment complicate this transition.
The distance from major cities—a factor that makes regional Australia attractive to holidaymakers—also leads to higher operational costs compared to urban counterparts, he added.
Hore, who also represents telecommunications interests for the Chamber, highlighted the need for improvements to regional mobile networks.
“When 20,000 visitors arrive,” he said, “mobile networks can become completely overwhelmed. This leads to businesses being unable to process transactions using 4G or 5G, resulting in the need for costly NBN installations just to ensure EFTPOS systems remain operational.”
The Future of Surcharges
Recent survey data indicates that rising costs are particularly burdensome for hospitality and retail business owners. Research conducted by Prospa, involving 503 business owners and decision-makers, found that 89% in these sectors are personally affected by increasing expenses—more than any other industry.
Given these financial pressures, it seems that hospitality surcharges are likely to persist. However, a pressing question remains: at what point will consumers, already tightening their discretionary spending in a challenging economic landscape, decide to walk away from cafes imposing a 15% surcharge?
“That’s not just a Bright issue,” Hore concluded. “It’s a question for all of Australia.”
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