Australian operators often hear: “Inflation has cooled, so pricing pressure should ease.”
But menu margins are driven by the cost stack, not one headline number. If labour assumptions are stale, prices can still be wrong.
Quick Summary
- Use award-aware labour assumptions in menu costing
- Convert hourly wage pressure into per-item labour dollars
- Separate weekday and peak-window economics before repricing
- Update top sellers monthly instead of waiting for quarter-end
2026 Operating Snapshot
ABS reports annual CPI movement at 2.4% for the December 2025 period. Fair Work’s Annual Wage Review 2024-25 set National Minimum Wage to $24.95/hour effective 1 July 2025.
In practice, this means operators can face stable headline inflation while labour-driven menu pressure remains active.
Core Formula (Labour-First Price Floor)
loadedHourlyRate = baseHourlyRate x (1 + oncostRate)
labourCostPerDish = (loadedHourlyRate / 60) x labourMinutesPerDish
priceFloor = (foodCost + labourCostPerDish + packaging + channelVariableCost)
/ (1 - targetMargin)If denominator is 0, return 0 and fix margin input first.
Worked Example (Cafe Brunch Item)
Assumptions:
- Base hourly rate benchmark: $24.95
- Oncost rate assumption: 12%
- Labour minutes per dish: 9 minutes
- Food cost: $6.20
- Packaging/channel variable cost: $0.80
- Target margin: 30%
Step 1: Loaded hourly rate
loadedHourlyRate = 24.95 x 1.12 = $27.94Step 2: Labour per dish
labourCostPerDish = (27.94 / 60) x 9 = $4.19Step 3: Price floor
priceFloor = (6.20 + 4.19 + 0.80) / 0.70
= 11.19 / 0.70
= $15.99Rounded selling point: $15.90-$16.50 depending on positioning.
Daypart Reality Check
For many cafes and casual venues, labour minutes and pay pressure are not uniform:
- weekday lunch: faster throughput, lower minutes per dish
- weekend peak: slower turns, higher labour intensity
If you use one blended number, weekend-heavy items are often underpriced.
14-Day Menu Reset Method
- Select 8 to 12 top-volume items
- Recalculate labour minutes in real service timing
- Rebuild price floors with current assumptions
- Adjust only items below floor or near-zero contribution
- Track contribution and guest feedback for 14 days
This keeps changes controlled and easier to explain to regulars.
Common Mistakes
- Treating all shifts as one labour-cost profile
- Using old wage assumptions in current pricing
- Raising all items equally instead of item-role pricing
- Ignoring channel costs on pickup/delivery-heavy SKUs
Margin control is usually won with frequent small corrections.
Related Guides
- Australia Menu Pricing Guide
- Australia Restaurant Labour Cost Calculator
- Australia Restaurant Surcharge Guide
- Australia Menu Price Review Checklist
- Prime Cost Guide
KitchenCost helps owner-operators connect labour minutes and ingredient cost to one actionable menu floor.
Try KitchenCost.