Millions of Australians are encountering public holiday surcharges at cafés, restaurants, and pubs today, with added costs ranging from 10 to 15 percent. While the extra charges may feel steep amid rising living costs, business owners argue they are essential to offset the elevated costs of operating on public holidays.
The Reality for Business Owners
Operating on public holidays comes with a significant financial burden for hospitality businesses. Ruby Rule, owner of three cafes in Queensland—Bramble Bay General, the Bone Yard Espresso, and Boney’s Deli—shared the financial challenges her businesses face.
“Opening on public holidays costs us around an extra $3,000,” Rule explained. The 15 percent surcharge her cafes implement helps recover some of this cost, though it doesn’t entirely cover the gap.
On a recent public holiday, Rule earned $719 from the surcharge across her three venues, which operated on reduced hours. However, her nine staff members collectively worked 55 hours, accruing $3,500 in wages. Comparatively, wages on a regular day would be about $1,800. The $1,700 difference illustrates how the surcharge falls short of covering even the majority of increased labor costs.
Dan Dick, who owns Born and Raised Coffee and Nigel cafes in Melbourne, echoed the sentiment, highlighting the impact of penalty rates. “Casual award rates can jump from $30 to $60 an hour, and full-time staff earn a day in lieu. It’s not feasible for businesses to absorb that,” Dick said.
Public Holiday Entitlements and Surcharges
Hospitality staff working public holidays are entitled to penalty rates, which can double their base wage. As Australia Day fell on a Sunday this year, Monday, January 27, was considered the official public holiday for penalty purposes.
Businesses can legally add surcharges to help manage these costs. The Australian Competition and Consumer Commission (ACCC) stipulates that customers must be informed of surcharges in a clear and prominent manner, typically via menu listings or signage. There is no cap on surcharge rates, though most venues charge between 10 and 15 percent, with some reaching 20 percent.
Mounting Pressures in the Hospitality Sector
The hospitality industry is already grappling with a challenging economic landscape. According to CreditorWatch’s Business Risk Index, the food and beverage sector faces the highest rates of business failures, payment defaults, and tax debt defaults over $100,000.
The average business failure rate across all sectors has risen to 5.1 percent, the highest since 2020, and is expected to climb to 5.6 percent in the coming year. Businesses are contending with a combination of higher operating costs, increased wages, labor shortages, and weakened consumer demand.
