Gracie’s Wine Room owner Kelsie Gaffey says five of her suppliers are now charging emergency fuel levy fees. (Source: TikTok/@kelsiegraceee)
Aussie restaurants, pubs and cafes are being slapped with fuel levy surcharges from their suppliers, putting pressure on an industry already facing escalating costs. The Iran war has sent fuel prices surging in Australia, sending ripple effects throughout the economy.
Kelsie Gaffey, owner of Melbourne wine bar Gracie’s Wine Room, has been facing increased costs from suppliers for the last few weeks. Five of her food suppliers have introduced emergency fuel surcharges, ranging from $2.29 to $5.50 plus GST per delivery, applied to multiple deliveries each week.
“Currently, the weekly cost is around $40 to 50, so the impact is manageable for us. However, if all suppliers began implementing this surcharge, we could see an increase of up to $350 in weekly costs, which would be a more significant burden,” Gaffey toldYahoo Finance.
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Gracie’s has between 30 and 35 suppliers from which it receives deliveries. Along with food suppliers, Gaffey has been contacted by her bin collection company, which said it was closely monitoring the situation and may need to implement a levy in the future.
She plans to continue absorbing these costs and doesn’t want to add to the financial strain already being felt by customers. But Gaffey says a lot of small venues may not be able to afford to do this, particularly if the fuel crisis lasts for an extended period of time.
Some hospitality businesses have already introduced higher menu prices, while others are implementing surcharges to offset the higher costs.
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Gaffey plans to continue absorbing the added costs but said many other small venues wouldn’t be able to do this. (Source: TikTok/@kelsiegraceee)
The Australian Restaurant and Cafe Association has been calling on venues to introduce a temporary fuel levy surcharge of up to 5 per cent for customers.
Chief executive Wes Lambert said some cafes and restaurants were on “razor-thin margins” and simply couldn’t afford the increased costs.
“Ultimately, we understand that everyone’s under pressure, but unfortunately, cafes and restaurants cannot absorb it,” he told Yahoo Finance.
Gaffey shared a video to her social media about how fuel costs were impacting her business and was met with comments from other business owners also dealing with added costs.
“It’s actually insane! A few of my suppliers have upped their minimum spends, ranging from $50 to $100 more than usual and as a small bar that makes such a difference for us,” one wrote.
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“We’ve had a freight company do an additional 30 per cent fuel levy for local and 50 per cent for regional!!! I think some companies are taking advantage of a shit situation to make more money as the increases we are getting are ridiculous,” another said.
CreditorWatch CEO Patrick Coghlan said Aussie small and medium businesses were facing “one of the most challenging operating environments” in years, as cost pressures, interest rates and global volatility all converge at once.
The credit reporting agency said insolvencies were already near record highs, and the global energy shock may push failures even higher.
“The data is clearly showing that these pressures are feeding through to cash-flow stress, slower payments and a rising risk of business failure, particularly for smaller operators with limited buffers,” he said.
In the hospitality sector, CreditorWatch found 10.4 per cent of food service businesses closed over the year to January. This was the highest rate of any industry and double the economy-wide average.
The Reserve Bank announced last week it would ban surcharges on debit and credit cards from October, with businesses now having to display the entire cost as part of the sticker price.
The RBA is also lowering the caps on interchange fees paid by Australian businesses, which it said would save businesses $910 million each year in reduced transaction fees.
Lambert has warned restaurants and cafes that their profit will fall unless they raise menu prices by at least what they were paying for merchant fees.
Gaffey currently passes on card surcharges to customers. While she believes the change is a “win for consumers” in the short-term, she has concerns for small businesses that don’t have the same negotiating power with banks or POS providers.
“Without that leverage, small businesses could face significant additional fees, potentially up to tens of thousands a year, which is a considerable burden for a small operation,” she said.
“In the long run, there could be unintended consequences for consumers as well. With the removal of card surcharges, many venues may choose to offset these increased costs by raising their menu prices, possibly by $1 per wine glass, for example.
“This means that, while consumers won’t see a surcharge on their bill, they might end up paying more for the same products.”
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