Do cafés need to change their wage structure?

New official data reveals how much baristas are taking home each year, prompting calls for cafés to take stock of their pricing structure.

Australia’s baristas and café workers have earned an average seven per cent pay bump, contributing to rising operational costs – yet many café owners are still reluctant to lift their prices. According to the Australian Restaurant and Café Association (ARCA), overcoming this “irrational fear” is one of the keys to a thriving and sustainable business in today’s hospitality climate.

The comments from Wes Lambert, CEO of Australia’s peak hospitality body representing the nearly 56,000 restaurants and cafes, come as new Australian Taxation Office (ATO) data for the 2022–23 financial year shows the average taxable income for baristas rose 6.5 per cent to $32,447, while café workers saw an eight per cent rise to $28,474. Café and restaurant managers recorded the largest jump – up nine per cent to $59,938.

At the same time, the barista and café worker workforce has expanded significantly by around 8000 workers.

The workforce growth, detailed in the ATO data, aligns with ARCA’s own monitoring of industry vacancies.

“ARCA has also been tracking the barista job listings on Seek for years. In the past 12 months, open job listings have dropped from nearly 10,000 to around 2000 on average,” Wes says.

“We’re getting into a much better position when it comes to baristas, servers, and bartenders. But we’re seeing a huge deficit in managers.”

The latest ATO figures show 41,920 Australians now list ‘barista’ as their job title, and 59,540 as ‘café workers’, up from 38,800 and 54,800 respectively the year prior. The majority – around three-quarters – are female, and the average barista’s income now sits at roughly 43 per cent of the national average taxable income of $74,240.

Wes says these relatively low annual incomes don’t reflect low pay, but rather the casual nature of the workforce.

“More than 60 per cent of the hospitality industry is casual,” he explains. “Many baristas and café workers are working holiday makers or are students still living at home working part-time while studying at uni or TAFE. That’s why their yearly income appears modest – but their hourly rate is actually quite high.”

According to the job search website Indeed, the average barista wage is $31.37 per hour, which would equate to a $61,554 salary if working full time. The current minimum wage is $24.95.

With wage costs rising, Wes says it’s time for café operators to confront the uncomfortable conversation around coffee price increases, if they haven’t yet.

“The ABS (Australian Bureau of Statistics) recently published that menu prices in restaurants and cafés rose 3.3 per cent year-on-year for the month of August,” Wes says. “In the previous quarter ending 30 June, menu prices were only up 2.3 per cent. The ABS said the spike was mainly due to wages and the cost of goods.”

Those costs, Wes notes, are rising on all fronts – but a more radical approach is needed.

“Cafés are under a lot of pressure now, with coffee bean prices skyrocketing due to weather issues in Brazil and Vietnam. That’s making its way through the system, putting pressure on the price of a cup of coffee – which, in some places, is now over $8, including airports and premium locations.”

But industry figures report a small flat white and cappuccino still hover under $5.50 (often under $5 in Sydney). To sustain a thriving coffee culture, it’s thought café owners may need to get to $5.50 for a small coffee as soon as possible. But there are many operators continuing to resist passing on costs to consumers, even as their overheads climb.

“It’s why insolvencies in the hospitality industry remain at record levels month over month. Cafés are under a lot of pressure when the going rate increases so quickly, and while consumers are still in a cost-of-living crisis, many café owners don’t feel they can pass on all their wage increases directly,” Wes says.

“I often quote this: a barista on a public holiday or Sunday in FY25 can make nearly $70 an hour – more than a first-year registrar, an engineer, or even a lawyer. That puts a lot of pressure on the hospitality industry.”

But Wes and ARCA believe that hesitation is misplaced. Ultimately, the only real solution to increasing wages and expenses is price increases. Cutting business costs is much harder and risks compromising quality. 

“With all due respect to café owners, we consider it to be an irrational fear – this idea that if you raise your prices to cover your cost increases, you’ll lose customers,” he says.

“The average customer won’t walk more than one block left or right from their main route to change cafés. Ultimately, it’s a worry that your coffee prices are going to be too high and you’ll lose customers to competitors. But when everyone has the same irrational fear, it keeps prices down – and that hurts everyone.”

Wes points out that in many coffee-drinking countries, consumers are paying far more than Australians – as much as $9 AUD to $15 AUD.

“Yet we’re still seeing some coffees here in Australia sold for as little as $3. That’s fascinating, and unsustainable.”

Elsewhere in Australia’s hospitality sector, the ATO reports a bar attendant’s average taxable income was $39,353, around $11,000 more than a drinks waiter at $28,885. The data did not include the average taxable income of a café owner.

The statistics for the 2022-23 income year were sourced from 2023 individual income tax returns processed by 31 October 2024. The data does not stipulate whether people are employed in a full time, part time, or casual capacity.