Frozen chip shortage, alcohol excise to put big dent in pubs’ bottom lines

The alcohol excise is set to rise by $5000 for pubs already facing skyrocketing frozen chip prices — forcing a “chip surcharge” in some watering holes.

Country pubs are charging a “chip surcharge” as they grapple with the ongoing shortage and rising cost of the counter meal staple.

And publicans are finding themselves under further financial strain with the latest alcohol excise rise costing at least $5000 a week.

That’s according to the Australian Hotels Association (AHA), with pubs also under the pump due to rises in the cost of other essentials such as such as steak and schnitzel.

The tax on beer is tied to inflation, and rises every six months with a 3.7 per cent increase coming into effect on February 1.

The pub staple of fried chips is becoming more expensive due to a supply lag. Picture: AAP/Sarah Marshall

AHA chief executive Stephen Ferguson said that smaller rural pubs would be slogged at least $5000 extra in excise per week.

“A country pub on average goes through 15 kegs a week, so they’ll be paying $5000 extra,” he said. “Medium to larger pubs obviously are paying more. They have to either absorb that cost or pass it onto the consumer.”

A number of pubs are doing the latter when it comes to skyrocketing frozen chip prices.

Australia’s hospitality sector is grappling with nationwide potato shortages due to floods and overseas demand for carbohydrates.

It has forced some country pubs to implement a ‘chip surcharge’, with a side serving costing a little extra for customers, or replaced by cheaper vegetables.

“It’s a bit like the public holiday surcharge. Pubs have got to cover their costs somehow and having those transparent surcharges give customers an understanding of the costs that their facing as publicans,” Mr Ferguson said.

The next alcohol excise rise is scheduled for August 1 and Mr Ferguson is calling on the federal government to implement a freeze.

“Excise is linked to CPI (the consumer price index) and that’s running hard at the moment due to inflation,” Mr Ferguson said. “(Treasurer) Jim Chalmers has a lot on his plate but freezing the excise would go a long way in helping pubs across Australia.”