Restaurants grind it out but catering has major rebound from Covid and labour crisis doldrums

The Viaduct in Auckland, where overall restaurant performances are still more erratic than an industry leader would like. Photo / Hayden Woodward

Takeaways, tourist hotspots and caterers had a generally good year but many restaurants kept struggling.

The Restaurant Association’s latest report laid out the state of the sector.

Despite some high-profile shutdowns and frequently dismal retail spending statistics, Restaurant Association chief executive Marisa Bidois said there was room for optimism.

“The report really highlights the mixed results from last year ... It could have been much worse,” Bidois said.

She said a rise international visitor numbers helped.

In the first three months of 2024, cafe and restaurant sales were up 4.4% year-on-year.

Takeaways were up 6%. Pubs, taverns and bar sales were up 1.1% and hospitality club sales were up 11.3%.

But the biggest rise by far was in catering, up 19.4% for the year ended March 2024.

“When times are a bit tough across the board economically our corporate clients will do more in-house catering,” Bidois told the Herald.

The relative success of takeaway operators was likely due to people cutting down on restaurant meals and opting for cheaper food, she said.

Kaikōura with its whale tours and other South Island visitor hotspots had the most to celebrate in the Restaurant Association's annual report. Photo / Whale Watch Kaikoura

Across the regions, only two recorded falling sales compared to a year earlier. Southland was down 2.2% and Wellington was down 5.5%.

Kaikōura had the biggest rise in sales, up 17%.

Marlborough wasn’t far behind, recording a 16.1% increase year-on-year.

Queenstown-Lakes and Hawke’s Bay were also well up, at 14.6% and 14.2%.

The country’s biggest city was up 6.8% on a year earlier.

“Auckland’s not doing as well as we would hope. There are still a lot of struggling businesses,” Bidois said.

Many people working from home meant downtown food joints weren’t getting as many customers as they’d like, but she said some suburban eateries were booming.

In Wellington, the slump was mostly attributed to public sector job cuts.

Bidois said the booms in Gisborne and Hawke’s Bay were largely due to recovery after the ruinous Cyclone Gabrielle.

But she said the other successful regions - Kaikōura, Marlborough, and the southern lakes towns - could thank tourism.

Marisa Bidois says parts of the sector are still volatile and operators in most regions need a far more robust economy before even thinking about relaxing.

The Restaurant Association’s new report said it took a while for inflation stresses to show up in data.

“By mid-2023 operators were beginning to report on the impact cost of living pressures were having on customer behaviours.

“Winter 2023 proved to be more challenging than expected and the Restaurant Association was focused on supporting members through the period.”

That included the Cooking up a Storm campaign which raised more than $350,000.

“The number of hospitality operations nationwide rose to 19,518. However this reflects minimal outlet growth of just 0.1% from 2022 to 2023,” the association added.

Rising operating costs were also hurting some operators, leading to growth that lagged behind cost increases.

“The combination of extreme weather events, rising food costs, declining customer traffic and spending, increasing wage costs, cost of living pressures, and election year uncertainties significantly affected overall industry productivity and profitability,” the new report added.

“To navigate these challenges, operators focused on lean operations and attracting customers.

“Food pricing fluctuations led many owners to closely manage food cost changes and adjust menu pricing to mitigate some of these rises.”

The association said the catering sector’s recovery was a major highlight.

Covid-19 had devastated that part of the industry and catering was also moving out of the times of extreme skills shortages which typified 2022.

The Restaurant Association said focus was needed on six issues.

One was increased training for New Zealanders to meet skills shortage needs.

Another was an agile immigration policy which it said should be flexible and responsive to hospitality sector’s needs.

The third was investment and the fourth was a review of regulations.

The fifth topic was about campaigns to address perception challenges, and improve the public’s perception of the hospitality industry.

And the sixth area of focus was digital transformation, especially how to use that technology to streamline operations and improve customer experiences.

The association said the number of hospitality operations nationwide rose to 19,518, reflecting growth of just 0.1% from 2022 to 2023.

“However, despite the hurdles faced, the industry has shown resilience and adaptability, with positive signs of recovery and growth in various sectors and regions.”

John Weekes, online business editor, has covered beats including consumer affairs, crime, court and politics at different newsrooms since 2011.