Price to pay to maintain Melbourne's famous cafe scene
The pitchforks are out for Melbourne’s cafe industry. A cafe in Northcote has been bruised by a social media campaign and a union protest after some staff were told not to come back to work after they complained about under-award wages.
Details of that particular case aside, here’s an inconvenient truth: a lack of wage policing and an insanely competitive landscape have resulted in good people doing bad things. While cafe owners may start wide-eyed and innocent, they are soon educated on how to play the game in order to survive. It’s been like this for decades with deceptive practices passed on from generation to generation.
The royal commission into banking has nothing on Melbourne’s cafe scene. Common practice is to hide some of the takings and pay it as cash wages, avoiding superannuation and, at the same time, reducing the GST bill. This practice is a favourite of owners, but also for staff who are students because it can enable Centrelink payments.
Penalty rates are either completely ignored or a token amount is paid. No part of the hospitality sector is without guilt: a tactic of big catering companies is to pay staff low part-time rates and then treat them like a casual, with no sick days and short shifts. High-end restaurants expect insane amounts of overtime and yet only pay a base full-time salary.
“Melbourne-style” cafes are a mix of great coffee and restaurant-quality food. We have a passion for our cafes with their quirky fit outs, inventive cuisine and coffee that pays homage to our Italian immigrants. We love them, but with their labour-intensive model they are currently unsustainable if they operate within the law and their food prices remain the same.
The United Voice union campaign is a welcome shake up, but it's all stick, no carrot. It has the potential to wipe out our beloved cafes unless the public is informed and brought along with the needed changes. If this doesn't happen the result will be fast-food style cafes that employ minors, heat-and-serve food from the front of house, and definitely no smashed avocado made in a dedicated kitchen. We are at a turning point: either we shut down cafes from public shaming campaigns; we abolish penalty rates; we substantially lower food quality; or we collectively put up prices.
Most cafe owners would dearly love to pay their staff properly but it just doesn't add up. Fixed costs can skyrocket if you are paying huge rent, on top of soaring utility bills, or expensive loans for a fit out.
While legitimate weekday wages can be sustained, the delicately balanced souffle collapses in heap when penalty rates are introduced.
A clear and transparent weekend surcharge would solve many problems. Some cafes do this with credit cards to pass on the exact bank charges and this seems to work well: everyone understands it’s not a cash grab. To cover the wage increases we need a 15 per cent surcharge on Saturday and a 22.5 per cent on Sunday. We could have a 18.75 per cent surcharge across the weekend so you don’t penalise Sunday diners.
On public holidays when wages more than double, a cafe should close unless its turnover is more than $10,000 for the day (which introduces all sort of efficiencies).
It will take some adjustment, but $4.50 for a small coffee, a 20 per cent weekend surcharge and closing on public holidays would enable cafes to continue to operate into the future with a clean conscience and be able to compete on a level-playing field. Staff will be paid properly and cafe owners can concentrate on delivering the great “Melbourne style” experience.
It would end the underlying structural problem of trying to compete with those who don’t pay their staff properly. The union could play a role and come up with an official sign to put in a window: “This cafe has 20 per cent weekend surcharge to enable payment of penalty rates”. If in a year you see a cafe without the sign, then by all means, put down the strong latte, and bring out the pitchforks and rattle them with outrage.
Gin Dixon (pseudonym) is an industry insider