A cafe owner has opened up on the dark side of running a small business during the cost-of-living crisis revealing they are earning less than the award wage.
Adam Thomson, who runs the Dovetail Cafe at Norman Park, in Brisbane, said he works 60 hours a week to keep the restaurant open.
Mr Thomson said the long hours have taken a toll on himself and his wife with the couple forced to take a pay cut.
‘The main thing we’ve had to do is try to cut costs wherever we can. So the quickest way to do that is just to be really careful with your wages,’ he told Yahoo.
‘So we’re actually having fewer people work here than we would like, and we’re having to do more work ourselves to make up the numbers physically doing a lot more work than we would ideally like to be.
‘We pay ourselves less than the award wage to be here because, at the end of the day, it’s just been a matter of matter of survival. The last year has been just survival mode.’
Mr Thomson said his small business is taking a massive hit due to the Goods and Services Tax (GST), which is costing him hundreds of dollars every week.
He said the cafe makes around $10,000 in revenue a week, but 10 per cent automatically goes to the ATO before any expenses are paid.
Cafe owner Adam Thomson (pictured right) has urged the government to scrap the GST to help small businesses in the hospitality sector
Mr Thomson said the the payment is a ‘cafe killer’ and has urged the government to scrap the tax to help small businesses.
‘In this industry, nearly everything we buy is GST-free, so we can’t actually claim anything, but everything we make, we sell with GST,’ he said.
The tax is applied to most goods and services sold or consumed in Australia.
The amount is passed onto consumers when they purchase an item before 10 per cent worth of sales are claimed back by ATO.
Businesses in Australia must pay GST if their annual turnover is worth $75,000 or more.
Mr Thomson said extra payments such as taxes are hurting the bottom line of small businesses.
‘You’re working harder than ever, and you don’t make enough to pay the bills, and inevitably, small business owners just say, ‘I just can’t do it anymore’, he said.
Leading Australian business analysis company CreditorWatch has forecast that one in 13 hospitality businesses will fail in the coming year.
CEO of CreditorWatch Patrick Coghlan warned conditions will get worse for businesses in the hospitality sector before they get better.
‘The outlook for hospitality businesses is not likely to improve until we see a lift in consumer spending,’ Mr Coghlan said in a statement.
‘That is not going to happen until the impacts of one or two rate cuts filter through to households. We don’t anticipate that being felt until at least the second half of next year.’
Mr Thomson said the tax is costing him hundreds of dollars every week (pictured Dovetail cafe)
The average failure forecast across all industries in 5.1 per cent.
Businesses have also been hit hard by interest rate rises after Reserve Bank increased the cash rate 13 times since May 2022.
The RBA has left rates on hold at 4.35 per cent since November 2023 with the next monetary policy meeting to be held on August 6.
