Wage costs can cripple businesses, say leading chefs


Penalty rates and labour costs are making it difficult for restaurants to make money, George Calombaris has said. Image: dailytelegraph.com.au

George Calombaris, the chef and restaurateur behind The Press Club Group of restaurants, has slammed Australia's labour costs, saying they have the potential to run his new venture into the ground.

Calombaris was speaking to The Power Index when he claimed floor staff at Mama Baba, his South Yarra pasta house would have to be paid "$40 an hour on Sundays ... and it's not like they've had to go to uni for 15 years."

The Masterchef judge said Australia's labour laws and penalty rates need to be reconsidered, because "it's just not a good business practice".

When referring to the Hospitality Industry (General) Award 2010, the Fair Work Australia website claims that casual employees are paid a 150 per cent loading on Saturdays, 175 per cent on Sundays and 275 per cent on public holidays.

The Power Index article included a rebuttle from Bill Shorten, Workplace Relations minister, who argued that hospitality workers rely on penalty rates and are some of the lowest paid employees in the country.

"Penalty rates compensate wait staff and others who have to work late nights, public holidays and weekends while everyone else gets to spend this time with family and friends. We saw penalty rates and wages slashed under the Liberals' extreme Work Choices laws, which was of course roundly rejected by the Australian people. The Gillard Government won't be adopting the low road of paying already low-paid workers less," he said.

Labour costs have been an ongoing concern for restaurateurs, and in a recent interview with Stefano Manfredi, head of Manfredi at Bells and The Star's Balla, he sang a similar song to Calombaris' and argued that it's very difficult for restaurants to make money these days.

"I think the GST made it very, very difficult and before that the introduction of the Fringe Benefit Tax. I grew up in restaurants before the Fringe Benefit Tax came in and people ate out quite a lot on their expense accounts ... What happened once FBT came in is a lot of corporate dining went in-house," Manfredi told Hospitality.

He said that in addition to ongoing labour costs, Australians are also increasingly abandoning their bookings without informing the restaurant, and this is another big expense for the business.

"I'm sure you're aware of the way that some customers book tables at two or three restaurants and decide at the very last minute which one they'll go to and then they won't ring up. That's more prevalent these days because I think Australians, and especially Sydneysiders, are spoilt for choice when it comes to restaurants."

Manfredi calls this the "democratisation of eating out" and says many restaurateurs today make most of their money outside the kitchen.

"I'm sure chefs don’t go out and open up restaurants because they think they're going to make a lot of money, otherwise they're silly.

"If you look at a lot of very successful chefs, they have one or two or three restaurants but they're just the shopfronts for their activities. They're necessary but that's not their primary source of income. The primary source of income is other things like appearances, books, cooking classes, products", he said.

What do you think? Are the current penalty rates over the top, or fair? What have your experiences been?


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