Rising costs, labour shortages pressure Australia’s QSR sector

Increasing commercial rents is also a key challenge.

Australia’s fast food and quick-service restaurant (QSR) sector is facing mounting operational challenges, including rising costs, labour shortages, and regulatory pressures, according to analyst reports

The challenges come as the broader Australian foodservice market continues to expand, with Market Data Forecast estimating the sector will grow from $94.99b in 2025 to $227.71b by 2034, highlighting strong demand despite operational headwinds.

According to IMARC Group, rising input and operational costs remain one of the biggest challenges for operators. Prices of key ingredients such as meat, dairy, and fresh produce have surged, whilst packaging, utilities, and logistics costs have also increased. Labour costs are also climbing due to wage growth and regulatory changes, making it harder for operators to maintain profit margins without passing costs onto customers through price hikes. The report noted that operators are increasingly reassessing sourcing strategies, streamlining operations, and adopting cost-control measures to manage financial strain.

Market Data Forecast also identified escalating commercial rents as a key restraint. Retail lease rates in major cities such as Sydney and Melbourne rose by up to 21% between 2021 and 2023, outpacing revenue growth for many operators.

Labour shortages continue to challenge the sector, particularly for frontline and kitchen roles, according to IMARC Group. The report said high turnover, post-pandemic workforce shifts, and immigration constraints have left many QSR operators understaffed, affecting service quality and operational efficiency.

Similarly, Market Data Forecast noted that hospitality remains one of Australia’s most labour-constrained sectors, with more than 48,000 unfilled foodservice positions reported in recent years. These shortages are also increasing training costs and placing additional strain on existing staff, with operators turning to flexible scheduling, incentives, and training programmes to retain workers.

Regulatory changes are adding further complexity. According to IMARC Group, new rules around nutritional labelling, waste disposal, and single-use plastics are forcing operators to invest in sustainable packaging and eco-friendly supply chains.

At the same time, Market Data Forecast highlighted growing scrutiny around third-party delivery platforms, with commission fees ranging between 25% and 35%, further eroding margins. Some operators report net margins on delivery orders falling below 5% after fees and costs. Supply chain volatility is also affecting ingredient availability and pricing, forcing operators to frequently adjust menus and pricing strategies.

Despite strong growth projections, the combination of rising costs, labour shortages, and regulatory pressures is forcing operators to balance affordability, service quality, and profitability.

Both reports noted that automation, procurement strategies, and operational efficiencies will be key for QSR operators navigating the increasingly complex Australian market.