Australian restaurants warn of closures after 4.75% wage rise
Australian café and restaurant operators warned the 4.75% award wage rise would hit already thin margins, with some venues eyeing 10% menu hikes and more closures.
Hospitality operators across Australia warned that a 4.75% rise in modern award wages would add to a cost squeeze already closing venues, lifting menu prices and threatening more businesses that rely on award rates to keep staffing levels intact.
The Fair Work Commission announced on 2 June that modern award minimum wages would rise by 4.75% from the first full pay period starting on or after 1 July 2026. The National Minimum Wage will rise 5.97% to $26.44 an hour, or $1,004.90 a week for a 38-hour week. About 2.8 million Australians, roughly 21% of employees, are paid at minimum award rates, and the commission said those workers account for about 11.2% of the national wage bill.
Restaurant and Catering Australia, which says it represents more than 57,000 cafés, restaurants and caterers, argued the higher wage floor landed alongside other costs that are already squeezing hospitality. Its chair, John Hart, said cost increases were “absolutely unprecedented”, while the group said the combined effect of wage rises, Payday Super changes, the phase-out of junior pay rates and the removal of credit card surcharges could force some venues to lift menu prices by at least 10% this year.
The warning came against a backdrop of closures that operators say are already reshaping the industry. Hart said about 10.9% of hospitality businesses had closed over the past year. In South Australia, Simone Douglas said rising electricity, gas and insurance costs forced her to close a CBD café in mid-2024 after it had “hemorrhaged money”, calling the sector in a “sad state”.
The Fair Work Commission described this year’s annual wage review as particularly difficult, and ABC reported the decision landed amid the “wildcard” of the war in the Middle East, which had disrupted oil supplies and accelerated inflation in Australia. Award-reliant workers, the commission said, were disproportionately female, with more than two-thirds working part-time, more than half casual and more than a third low-paid.
Last year, the commission increased minimum and award wages by 3.75% to $24.10 an hour, or $915.91 a week, affecting about 2.6 million workers. The latest rise gives hospitality workers a bigger pay floor, but operators say the real test is whether restaurants can absorb it without trimming hours, cutting shifts or closing doors.
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