Why a full Indian restaurant in Australia can still lose money

Ranga Tiruman ran Rasam, a vegetarian Indian restaurant in Canberra’s Civic, for two years with co-owners Uday Vasiraju and Gayathri Srinivasan. When he told The Canberra Times in June 2026 that it would close, he did not describe a business that failed to find customers. He described one that never made money at all. “Since the day we started, we haven’t really made even a single dollar for this business,” Tiruman said. His conclusion was blunt: “We still have the passion, but you can only do so much for your passion.”

That gap, between a room that looks busy and a business that banks nothing, is the central fact of Australian hospitality in 2026. It shows up in the regulator’s own files.

The restaurant profit margin Australia works to, and what the insolvency records show

The Australian Securities and Investments Commission publishes weekly counts of companies entering external administration for the first time. Run the accommodation and food services division across financial years, using the file ASIC released on 24 August 2026, and the shape is stark. The sector recorded 738 first-time insolvencies in 2021-22, then 1,114, then 1,668, then 2,476 in 2024-25. In 2025-26 it eased to 2,078, a fall of 16.1 per cent, but still 2.8 times the 2021-22 figure. Across all industries 2025-26 produced 14,152, against 14,722 the year before. Food and accommodation made up 14.7 per cent, second only to construction.

CreditorWatch tracks the wider closure rate, which counts businesses that shut without a formal insolvency. Its August 2026 index put café and restaurant closures at 12.03 per cent over the 12 months to July 2026 against a national average of 6.69 per cent. Chief executive Patrick Coghlan said that one-in-eight rate “reflects the pressure the sector has already absorbed”.

The costs that land before a customer sits down

The Australian Bureau of Statistics put annual inflation at 3.8 per cent in the year to June 2026, with underlying inflation steady at 3.6 per cent, as head of price statistics Rachael McCririck noted. Food and non-alcoholic beverages rose 3.3 per cent. Meals out and takeaway foods rose 4.0 per cent, which the ABS attributed to “rises in ingredient, wages and operating costs”.

Those two numbers, 3.3 and 4.0, describe the squeeze precisely. Menu prices are rising faster than grocery prices, and still not fast enough, because the inputs a restaurant cannot put on a plate are rising faster than either. Electricity was 22.4 per cent higher over the year, largely because Commonwealth and state rebates ended. The ABS producer price index for the June quarter showed road freight transport up 15.5 per cent after diesel supply disruption following the 2026 conflict in the Middle East.

John Hart, executive chair of Restaurant and Catering Australia, told the ABC in June 2026 that “the cost increases right now are absolutely unprecedented”, citing a 21 per cent rise in labour costs over three years and 17 per cent in the cost of goods over four months.

Rent is the quiet one. Melbourne’s CBD shop vacancy rate has fallen to 4.6 per cent from 6.1 per cent a year earlier and above 30 per cent during the pandemic, and hospitality now makes up 49.4 per cent of the city’s tenancy mix, according to agency Fitzroys.

The wage bill after 1 July

The Fair Work Commission’s Annual Wage Review 2026 lifted modern award minimum wages by 4.75 per cent. The national minimum wage rose to $1,004.90 a week, or $26.44 an hour, up from $948 and $24.95, about 5.97 per cent, because the Commission also realigned the floor to the C12 classification. A lower entry rate of $978.10 applies for up to six months. The increases took effect from the first full pay period on or after 1 July 2026. Commission president Adam Hatcher said the panel “concluded regrettably that it would not be practicable or responsible in the current uncertain circumstances to award a real wage increase … sufficient to close the real wage gap entirely”.

Most Indian restaurants sit under the Restaurant Industry Award 2020 (MA000119) or the Hospitality Industry (General) Award 2020 (MA000009), depending on the venue. Under MA000009 the Level 1 adult rate from 1 July 2026 is $26.44 an hour and Level 2 is $27.08, with 25 per cent on top for casuals. Saturdays run at 125 per cent for permanents and 150 per cent for casuals, Sundays at 150 and 175 per cent, and public holidays at 225 and 250 per cent. Weekday evening work adds a flat $2.95 an hour.

Stack those correctly and a Level 2 casual working a Sunday costs $47.39 an hour. The 175 per cent Sunday rate already includes the casual loading and applies to the $27.08 base, and the $2.95 evening loading runs Monday to Friday only. That number matters because Sunday evening is when a suburban Indian restaurant does its best trade. The busiest service of the week is also one of the dearest hours the business will buy, short only of a public holiday, when the same casual costs $67.70.

Payday super and the end of an interest-free float

Since 1 July 2026, employers must pay superannuation at the same time as wages, with contributions received by the fund within seven business days. The rate is 12 per cent. Money that could previously sit in the business account for up to four months now leaves with every pay run.

Angie Markou and Chryssie Swarbrick closed their Coburg café, Two Franks, on 1 August 2026 after three years. Markou told Yahoo Finance the July changes were the trigger. “While individually [the changes] are reasonable and you could make it work, having them all come in all at once with such a short period of time to get prepared,” she said. “It was just the nail in the coffin.” Her margin arithmetic is the point: “Most hospitality businesses are running on 2 to 7 per cent margins, adding in an extra $10,000 that you have to find somewhere … that’s a huge loss for us.”

At the 2 to 7 per cent margin Markou describes, a 4.75 per cent award increase applied to a wage bill is not a rounding error. It is most of the profit. Swarbrick’s complaint was about scale, not fairness: small businesses are “treated the same as big operations when we just don’t have that same cash flow”. The super was never the employer’s money. What ended on 1 July was a float, and floats are what thin-margin businesses were quietly running on.

Getting the award wrong carries its own price

The Fair Work Ombudsman recovered $358 million for more than 249,000 underpaid workers in 2024-25 and secured $23.7 million in court penalties. In August 2026 it reported surprise inspections of 28 Hobart fast food outlets, restaurants and cafés that recovered $129,674 for 180 workers. Base rates were underpaid at 20 of the businesses and penalty rates at 18.

Ombudsman Anna Booth said workers in this sector, “who are often vulnerable young people or visa holders”, are “still missing out on their lawful wages”. One North Hobart operator, unnamed in the release, gave the most honest account of how it happens: “When the FWO first visited in 2019, I was new in the industry and had no clue about the Award or that I was doing anything wrong.”

That is the ordinary case, and it explains why the award tables above matter. In April 2026 the regulator signed an enforceable undertaking with The Luck Bird Pty Ltd, operator of Carlucci’s Restaurant in Templestowe, Melbourne, over $194,011 owed to 38 employees, including five visa holders from Nepal and India. The finding was flat-rate error rather than deliberate exploitation. Booth’s comment applies across the sector: “Flat hourly rates of pay can commonly fail to meet hardworking employees’ full range of entitlements.” A flat $30 an hour looks generous against a $26.44 base and is unlawful on a Sunday night.

What the apps and the card machine take

Delivery platform economics are brutal at these margins. Competition thinned in November 2025 when Menulog closed its Australian operations after 20 years. The ACCC opened a preliminary investigation into Uber Eats in May 2026, but it concerns exclusive dealing, not commission levels.

Card fees are smaller but they compound. With surcharging being wound back, what a restaurant pays in card fees disappears into menu prices or into the margin.

The chef shortage runs through the visa system

Chef, ANZSCO 351311, and Cook, 351411, both sit on the Core Skills Occupation List of 456 occupations that underpins the Skills in Demand visa. Café or Restaurant Manager does not. A tandoor cook can be sponsored; the person who runs the floor generally cannot.

Melbourne chef Amar Singh, now behind Bibi Ji on Lygon Street along with Horn Please, Daughter in Law, Pinky Ji and Dhaba at the Mill, came through that pipeline the hard way. He trained in Kapurthala and Jalandhar in the early 2000s and arrived on a student visa in 2008. Two decades on, that trade training is the asset the visa system is rationing.

The ceiling on what a curry is allowed to cost

Every cost above applies equally to a bistro charging $46 for a main. What is different for Indian restaurants is the price the market will bear at the top. A kitchen running a tandoor, a separate vegetarian section and a spice inventory measured in dozens of line items carries the complexity of a mid-tier restaurant while competing against a customer expectation formed by $16 curry-and-rice.

That ceiling has consequences. Tiruman’s verdict on Rasam was structural, not culinary: “I think for anyone in future, running a vegetarian restaurant here in Canberra is simply not viable.” He cited a shrinking Indian student population, weekday foot traffic and an inability to draw larger groups because some diners wanted meat.

The operators holding on are the ones redesigning the cost base rather than the menu. Singh renovated Bibi Ji himself over nine months, doing the interior, plumbing and electrical work rather than hiring contractors, and runs a deliberately short list of eight to ten dishes a day, which cuts waste and stockholding. He has also moved the food: diners want lighter cooking, he told The Indian Sun, and “we don’t make them too oily or too spicy”. That is a margin strategy as much as a culinary one, because a shorter menu survives a 22.4 per cent power bill better than a long one.

What survives

Return to Tiruman’s sentence. He did not say the food was wrong, or that nobody came. He said that after two years of trading, the business had never produced a dollar.

A full restaurant in 2026 is a business converting revenue into wages, rent, power, platform commissions, card fees and superannuation at a speed that leaves 2 to 7 per cent behind, if that. The award increase, payday super and the surcharge changes each arrived defensibly and all landed at once, on the least buffered businesses in the economy. The restaurants that last will be those that treat their floor plan, their menu length and their pay run as the same problem. That is a harder craft than cooking, and far less visible from a table on a Sunday night.