A cafe owner has opened up about the dark side of running a small business during the cost of living crisis, admitting he is earning less than his standard salary.
Adam Thomson, who runs Dovetail Cafe in Brisbane’s Norman Park, says he works 60 hours a week to keep the restaurant open.
Mr Thomson said the long hours took a heavy toll on him and his wife, and the couple had been forced to take a pay cut.
“The biggest thing we’ve had to do is try to cut costs wherever we can. So the quickest way to do that is just be very careful with your wages,” he said. Yeah.
‘So we actually have fewer people working than we would like, and we have to do more work ourselves to keep the numbers up, while we are physically doing much more work than we would like in principle.
“We pay ourselves less than the wages we get to be here because at the end of the day it’s just a matter of survival. This past year has just been a matter of survival.”
Mr Thomson says his small business is taking a huge hit from the Goods and Services Tax (GST), which is costing him hundreds of dollars every week.
He said the cafe generates about $10,000 a week in revenue, but 10 percent automatically goes to the ATO before any fees are paid.
Cafe owner Adam Thomson (pictured right) has called on the government to scrap GST to help small businesses in the hospitality industry
Mr Thomson called the payment a “pub killer” and urged the government to scrap the tax to help small businesses.
“In this sector, almost everything we buy is exempt from VAT, so we can’t really claim anything, but everything we make, we sell with VAT,” he said.
The tax is levied on most goods and services sold or consumed in Australia.
The amount is passed on to the consumer when they purchase an item, before 10 percent of the turnover is reclaimed by the ATO.
Businesses in Australia must pay GST if their annual turnover is $75,000 or more.
According to Mr Thomson, additional payments, such as taxes, are damaging the profits of small businesses.
“You’re working harder than ever and you’re not making enough to pay the bills, and inevitably small business owners say, ‘I just can’t do it anymore,’” he said.
Leading Australian business analysis firm CreditorWatch predicts that one in 13 hospitality businesses will go bust in the next year.
Patrick Coghlan, CEO of CreditorWatch, warned that conditions for hospitality businesses will get worse before they get better.
“The outlook for the hospitality industry is unlikely to improve until we see an increase in consumer spending,” Mr Coghlan said in a statement.
“That’s not going to happen until the effects of one or two rate cuts start to filter through to households. We don’t expect that to be felt until at least the second half of next year.”
Mr Thomson said the tax costs him hundreds of dollars every week (pictured: Dovetail cafe)
The average failure forecast across all sectors is 5.1 percent.
Businesses have also been hit hard by rising interest rates, after the Reserve Bank raised the cash rate 13 times since May 2022.
The RBA has left interest rates unchanged at 4.35 percent since November 2023. The next monetary policy meeting is on August 6.
