There’s a conversation happening in kitchens right across regional NSW that nobody wants to have out loud.
A restaurant owner sits down with their accountant. They’ve crunched the numbers on their signature pasta dish. With food costs significantly higher than just a few years ago, wages climbing annually, and rent that never seems to stop rising, the maths is clear. To maintain the same margins they had three years ago, that pasta needs to be $60.
“But I can’t charge that,” they say. “My customers would walk out.”
And they’re right. In their market, serving their local customer base, $60 for pasta isn’t just expensive – it’s outrageous. Sure, there are high-end restaurants pulling it off in Sydney or Melbourne. But a neighbourhood Italian place in regional NSW? Not a chance.
So instead, they charge $32. The restaurant stays full. The reviews stay positive. And every single plate they serve makes them less money than it should.
If this sounds familiar, you’re not alone. Across the Hunter Valley and regional NSW, we’re seeing the same squeeze play out everywhere. From coffee shops to restaurants to pubs, the maths has fundamentally changed, but the market hasn’t kept pace.
“It’s a struggle out there,” says one of our senior advisers who works with hospitality clients. “It’s a completely different environment from just a few years ago. Massively different.”
The question isn’t whether this affects you. It’s whether you’re tracking exactly how much it’s costing you, and whether there are hidden costs making things even worse than you realise.
Hospitality faces two specific challenges that compound everything else: the pricing trap and the platform tax.
Let’s look at both, and more importantly, what you can actually do about them.
Hidden Cost #1: The Pricing Trap (Or Why Being Busy Doesn’t Mean You’re Profitable)
Here’s what makes hospitality uniquely brutal right now.
In most industries, when your costs go up, you raise your prices to match. Your margins stay intact, your customers grumble a bit, and life goes on. But hospitality doesn’t work that way. You’re not just competing on quality or convenience. You’re competing on perceived value in a category where customers know exactly what things “should” cost.
That pasta? Customers have anchored expectations. They’ve been paying $25-$35 for pasta for years. When you bump it to $38, they notice. When you try to push it past $40, they start questioning whether they should just cook at home.
Meanwhile, your actual costs keep climbing:
- Food costs: Significantly higher than pre-COVID
- Wages: Award increases every year, plus super going up
- Rent: Never negotiable downward
- Energy: Dramatically increased
- Packaging: (if you’re doing takeaway) adding up fast
You might nudge your menu prices up 10% here, 15% there. But you’re never catching up to the actual cost increases. The gap between what you’re charging and what you need to charge to maintain margins is slowly bleeding your business.
“The cream just isn’t there anymore,” as one operator put it to us recently.
The wake-up call: Pull your last three months of sales data. Compare your food cost percentage to what it was two years ago. If it’s crept up more than 2-3 percentage points, your margins have quietly disappeared. You might be just as busy as ever, maybe even busier, but you’re making less on every single transaction.
What to actually do about it:
You can’t charge $60 for pasta in a market that won’t bear it. But you can get surgical about understanding what’s actually making you money.
Start with a menu audit. Not a gut-feel exercise. Actual numbers. For every item you sell, calculate:
- True food cost (including waste)
- Labour time to prep and serve
- Actual margin after all costs
You’ll likely discover some uncomfortable truths. That popular pasta that keeps customers happy? Might be your biggest loser. That side dish everyone adds on? Could be your quiet hero.
This isn’t about panic pricing or doubling everything overnight. It’s about menu engineering. Which items can carry a strategic price increase without customer pushback? Which ones need to be quietly retired? Which profitable dishes should you be actively promoting?
“We can look at your sales data and calculate your actual margin on each dish,” one of our advisers explains. “Most operators are surprised by the gap between what they think they’re making and what they’re actually making. But at least you’ll know.”
Sometimes the answer isn’t changing prices at all. It’s changing the menu. Subbing in a different protein that’s more cost-effective. Simplifying prep to reduce labour. Highlighting the items that actually make you money instead of the ones that just look good on Instagram.
Hidden Cost #2: The Platform Tax (Or How “Extra Revenue” Might Be Costing You Money)
Remember when Uber Eats and Menulog seemed like the answer? Easy extra revenue during COVID. Customers who might never visit in person. What’s not to love?
Then you started noticing something odd. You were busier than ever, but your bank account told a different story.
Here’s what most operators don’t realise: delivery platforms aren’t just taking their commission and walking away. The true cost is much higher, and it’s often invisible.
Let’s work through an example. A customer orders $50 worth of food through Uber Eats:
- Platform commission (35%): -$17.50
- Packaging costs: -$3.50
- Extra labour (bagging, coordination): -$2.00
That $50 order just became $27 before you’ve even covered the actual food cost. If your food cost runs around 30%, you’re down to roughly $12 in gross margin. After covering your fixed costs like rent, utilities, and permanent staff, you might be making a few dollars per order. Or nothing. Or actually losing money.
“People just don’t look at the numbers as much as they probably should,” our adviser observes. And he’s right. Most operators see “$50 sale” and feel good about it. They don’t realise they’d have been better off closing early and going home.
Now, that doesn’t mean all platforms are bad all the time. If you’ve got excess capacity and high-margin items, delivery can work. A $20 pizza that costs you $4 in ingredients and travels well? That can make sense. But a complex dish that requires careful plating, has a higher food cost, and arrives soggy? You’re working hard to lose money.
What to actually do about it:
Run a Platform Profitability Check. Pull your last quarter’s statements from Uber Eats, Menulog, DoorDash, whatever you’re using. For each platform, calculate:
- Gross sales
- Minus commission
- Minus packaging
- Minus additional labour
- What’s actually left?
Then compare that to your dine-in margin on similar items. The answer might surprise you.
If the numbers aren’t working, you have options:
Optimise: Remove low-margin items from delivery menus. Focus only on items that travel well and maintain good margins even after commissions.
Negotiate: If you’re doing volume, some platforms will negotiate better commission rates. It’s worth asking.
Alternative systems: Square, direct ordering through your website, or your own delivery staff for regulars. These might require upfront investment, but can dramatically improve margins.
Exit: Sometimes the right answer is to quit platforms entirely. If you’re busy enough without them and they’re destroying your margins, why bother? “Just because everyone else is doing it” isn’t a business strategy.
The Seasonal Compounding Effect
Here’s where it gets really challenging for hospitality businesses in regional areas.
You might be able to manage tight margins during busy periods when tourist traffic is up. But quieter months hit, customer numbers drop, and suddenly those same squeezed margins can’t cover your fixed costs. So you delay paying super. You push the ATO bill back a month. You ride supplier credit just a bit longer.
Then the busy season arrives, and yes, you’re flat out again. But now you’re not just covering current costs. You’re trying to catch up on everything you deferred during the quiet period, plus build a buffer for next time, all while still operating on margins that are too thin.
And there’s a new wrinkle coming. From July 1, superannuation goes pay-as-you-go. No more quarterly catch-ups. If you’ve been using super deferrals to manage seasonal cash flow, that option is disappearing.
If you’re carrying ATO debt and paying 11% non-deductible interest, there are smarter ways to manage tax obligations than hoping things improve.
Don’t Figure This Out Alone
The hospitality operators who’ll thrive aren’t necessarily running the busiest restaurants. They’re the ones who understand their real numbers, make decisions based on margin (not revenue), and plan ahead rather than hope things improve.
Your busy period is your window. Not just to survive, but to get clear on what’s actually working, what’s quietly killing you, and what needs to change before the next quiet stretch.
We work with hospitality businesses across the Hunter Valley to answer these exact questions. Not with generic advice, but with your actual numbers. What are your true margins per dish? Are your delivery platforms helping or hurting? Will your peak season revenue cover what the quiet months cost you?
You’ve worked hard to build your business. Now let’s make sure the next 12 months are sustainable, not just survivable.
Ready to get clear on your numbers? Book a chat with one of our experienced accountants to discuss where you stand, identify what’s working and what isn’t, and help you make confident decisions about the months ahead.
Contact the friendly team at Acumon today on (02) 4931 1100 at Greenhills or (02) 4955 9195 at Lambton – or book a consultation today.