Australia’s cafes, restaurants and caterers are bracing for another shake-up, with the Fair Work Commission’s 3.5% increase to the modern award minimum wage, set to kick in from 1 July 2025.

While a pay bump is good news for hospitality workers doing it tough, the industry’s peak body, Restaurant & Catering Australia (R&CA), is sounding the alarm for small business owners already juggling rising costs.

“This decision will directly impact the viability of hospitality businesses in Australia and the future of gastronomy in our nation,” said R&CA CEO Suresh Manickam.

According to R&CA’s latest Industry Benchmarking Report, nearly 80% of operators are already planning to raise menu prices to cover rising wage bills. This latest increase, they warn, may only pour fuel on the inflationary fire.

A tough pill to swallow for family-run venues

The R&CA says it had called for a more modest increase of no more than 2.5 per cent, arguing that last year’s wage hike contributed to rising inflation. They’d hoped this year’s decision would balance fairness for workers with the economic challenges still hammering small operators, from rent and supplier costs to utilities and interest rates.

“This wage hike is purely unsustainable for industry operators,” Manickam said. “It’s not just wage costs—there’s a flow-on effect that hits everything, and that includes your morning coffee.”

The concern? That higher wages could mean fewer shifts or even job losses for some, as businesses tighten their belts just to stay afloat.

Pricey pies and dearer dining?

With cost pressures climbing, many operators are left with few options other than increasing prices. And while no one’s suggesting your weekend avo toast is going to double overnight, everyday consumers might start noticing price hikes creeping in across their favourite local haunts.

R&CA says it will continue to monitor the impact of the decision on hospitality businesses and push for long-term policy settings that better support the sector.

What small business owners can do

If you run a café, bar, food truck or bistro, now’s the time to:

Review your pricing strategy and menu costings

Consider where efficiencies can be made without compromising quality

Keep communication open with your staff—clear expectations help during times of change

Stay across award changes via Fair Work and consider advice from your industry association or accountant

Need more insights? Head over to our HR hub for plain-English tips on navigating wage changes, workplace compliance and team wellbeing. Because whether you’re pulling espressos or plating up pasta, staying in business shouldn’t mean burning out.

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