Spend Big in Sydney

sydneyWhy our most populous city is so damned expensive!

By David Spanton

Prices in Sydney are ridiculous. I know I keep banging on about this in some way or another especially after any international bar crawl, but having just come back from Hong Kong I can’t help myself. Compared to other international cities, drinking and dining prices are getting out of hand and Sydney might be the worst offender but she’s not alone. I had to laugh recently when the Channel 10 show The Project joked about one of those ‘expensive city’ studies and that we seem to wear the title of ‘most expensive city in the world’ with pride. Sydney has never been a bargain town, but when it’s cheaper to eat, drink and travel in places like New York, San Francisco, Dublin, Tokyo and Hong Kong then we’re in trouble.

The high dollar is a big factor and it’s definitely keeping many potential tourists from coming down under. High labour costs and penalty rates are another big reason for huge running costs, along with ridiculously high importing taxes on spirits and a range of other taxes on businesses being introduced recently thanks to Labor. This will only keep pushing the costs in one direction and that is north.

Let me give you a couple of everyday examples. Sydney taxis are without question the most expensive in the world, even if you don’t factor in the huge road tolls drivers are forced to pay just for the privilege of driving on extremely congested roads. A normal cappuccino coffee is around $4 in Sydney or Melbourne and also seems about 20 per cent more than what you get it for in a good café in San Francisco or New York.


A chicken salad wrap will cost you around $10 minimum in Sydney and that is at least three dollars more than a similar set up in New York or Dublin. Now the item that tends to highlight my point the most is the all important draft beer. In Sydney’s better pubs, you will be paying around $5.50 for a schooner of something tasteless and local and at least $8 for a middy of something imported and up to $12 for a schooner if they sell it. Compare that to any other city in the world and you are paying at least 30 per cent, if not 50 per cent, more for that same kind of beer. Tourists are gob-smacked to say the least.

After speaking to local operators over the years it is clear that this high price structuring is unavoidable due to the huge labour costs that bars and restaurants incur. Rent and overheads can account for around 35 per cent, give or take, and then labour as much as 35 per cent. Crippling penalty rates are also doing operators no favours. Take opening a bar and working out a budget. You will be paying something like 40 to 60 per cent of your total budget in just labour costs – including consultants! That means the actual materials to build your dream joint cost just 40 per cent, but you have to fork out a massive 60 per cent in labour to get it done. The building industry is also on its knees in many areas as their labor costs are well above 40 per cent.

My point to all this is that hospitality costs are way too high in most capital cities and if the economy stumbles then a lot less people will be willing, or able, to fork out these high prices for a night out. In my opinion the solution has to be getting the labour costs down and dare I say, getting rid of the Labor party would also be a good start!

This article featured in the August issue of Bartender magazine.

  1. Getting labour costs down? That’s what attracts bartenders to Sydney, income and lifestyle. Sydney bartenders are paid well, enjoy a great lifestyle, bartenders coming from London especially say bartenders have it easy in Sydney.

    The only way labour costs can be reduced is by employing bartenders under salary, as opposed to wage (there’s no way awards can be changed, not reduced anyway) And there’s a fine line there as then you’re essentially working your bartenders longer hours for less pay, look at the bars which have the lowest attrition rates in Sydney, why do their bartenders stick around longer than in other bars? Remuneration! That and work / life balance. Put experienced bartenders under a salary, work them 50-60hrs each week for a 35-40k salary with less than $150 tips a week on top of that and good luck keeping them around for 3-5yrs + unless that salary is at least 55k a year and the tips $300 + a week. There are numerous bars in Sydney which manage to keep bartenders on-board for 3-5yrs +, then there are dozens which don’t. The ones that do pay more, the bartenders make more tips and the managers are more flexible with the rosters i.e. giving them weekends off, varying start and finish times etc.

    Bartenders will stick around for a few main reasons, which include: money (tips and wage/salary), training (learning and development), management (managers who look after their staff build loyalty, trust and keep their bartenders around longer e.g. by feeding them, giving them time off when needed, being flexible with the roster, providing a fun work environment etc).

    The bar scene in Sydney has become so competitive, there’s a huge shortage of bartenders, anyone with a decent attitude, work ethic and some experience can walk into a decent bar and command a wage of $20-$25 p/h (often in cash) and employers are forced to pay it due to the huge skills shortage.

    From what I hear salaries are common in Melbourne for bartenders, in Sydney they’re not as far as I know. Sydney bartenders have it really good and it’d take a long time to start moving bartenders from wage to salary in that town. I’m not privy to taxes, however being one of the most heavily taxed countries on earth a major reason for the inflated prices of our drinks (and reduced abv of our bottles) has to be because of taxes, which are another thing we can’t change.

    So, what can we do? Some bars explore other avenues to reduce labour costs e.g. give bartenders minimum or no wage, and instead give them a % of the business/profits/sales. They offer fringe benefits e.g. meal allowance, or provide staff with meals, get them gym memberships, pay for health care, give them an education allowance/fund to access so they can do courses, diplomas, degrees. Set sales targets and only if the targets are achieved then the staff receive further remuneration above minimum wage. Some offer huge discounts when drinking/eating/staying at that bar/property and their affiliated venues around Sydney, NSW, Australia and in some cases the World.

    Operators are constantly thinking up more creative ways to reduce labour costs and entice bartenders to work for them with packages as opposed to simply who pays more per hour. The Sydney bar scene will eventually reach a saturation point, whether that be in 1yr, 5yrs or 10yrs, who knows, regardless, if the economy takes a turn for the worst and small bars start going under bartenders will lose jobs, others will take huge pay cuts in the smaller venues still around as there’ll be more bartenders than jobs, and what else will happen is you’ll see bartenders running for security in the bigger venues / groups / hotel bars e.g. Merivale, Keystone, 5 star hotel bars like Zeta etc, all of whcih are companies which can often pay well and provide great benefits and job security. Let’s see how the next 5yrs pan out in terms of supply and demand of Sydney bartenders.

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