South Australian restaurants, cafés and hospitality venues are being warned to brace for another cost hit from July, after the Fair Work Commission’s 2026 Annual Wage Review delivered a 4.75 per cent increase to minimum award wages.
Restaurant and Catering Australia has warned the impact on hospitality businesses will be much higher than the headline figure suggests, arguing penalty rates will multiply the increase across the very trading periods many venues rely on most.
The decision, handed down today, will apply from the first full pay period commencing on or after July 1, 2026. According to R&CA, the 4.75 per cent increase lifts the minimum award wage by about $45.57 per week, but for hospitality operators, the cost does not stop there.
Because penalty rates apply across evenings, weekends and public holidays, R&CA says the minimum impact for a hospitality business is closer to $56.96 per week, with many venues expected to face an even larger increase depending on their staffing mix and trading hours.
The national peak body says the decision lands at a difficult time for restaurants, cafés and catering businesses already managing high input costs, cautious consumer spending and tight margins. It has now renewed calls for a simpler wage system that better reflects the way modern hospitality operates.
R&CA National President John Hart OAM, who represented the sector identified in the decision as facing the greatest impact, said the outcome confirmed the need for reform.
“Today’s increase will cost hospitality businesses far more than the figure on the page, because penalty rates compound the base rate across the very hours our venues trade,” Mr Hart said.
“Our members support fair pay for their teams. What they cannot sustain is a system that layers cost upon cost through a penalty rates structure built for a different era. The answer is reform to a simpler, more workable framework that recognises how modern hospitality actually trades.
“There is also a tired claim that operators will simply raise menu prices to cover this. That is a fallacy. Businesses respond to cost pressure through a range of levers, and the operators who rely on price alone are the ones who would benefit most from a holistic view of their costs. R&CA and our partners can help members find those savings rather than pass everything to the customer.”
R&CA had argued throughout the review that any increase should be capped at no more than 3.5 per cent. At the hearing, the organisation also proposed the rise be applied as a dollar figure rather than a blanket percentage, saying that would prevent the increase being compounded again through penalty rates.
The group says it is now reviewing the full decision and will provide detailed guidance to members once determinations are published. Hospitality businesses have been encouraged to review the draft determinations for each Modern Award once released by the Fair Work Commission, and to begin preparing for the new rates before they take effect from the first full pay period on or after July 1.
For South Australian diners, the decision could sharpen the pressure already being felt across the state’s hospitality sector, where wages, food, energy and insurance costs continue to shape how venues staff rosters, open across weekends and public holidays, and manage rising operating expenses.
