The owner of Tauranga’s Love Rosie cafe has slashed his staff by two-thirds to stay afloat and fears the spiralling cost-of-living crisis could still force his business to close.
Matthew Weinberg has spoken out about the challenges his business faces as other Tauranga businesses say the dramatic drop in trade is proving more difficult to navigate than the Covid-19 lockdowns when government subsidies were available.
Hospitality New Zealand says hospitality businesses are under pressure with food costs increasing by 17 per cent in the past two years and minimum wage rates increasing 13.5 per cent.
The Bay of Plenty Times reported this month that according to Stats NZ’s most up-to-date Consumer Price Index, the prices of meat, fish and poultry have increased 8 per cent on the previous year.
Weinberg said his café had experienced a 70 per cent drop in sales.
Cafes were “at the bottom of the food chain” when it came to discretionary spending with costs such as fuel, rents and grocery prices increasing.
“People just aren’t buying in the volume they were before.”
Weinberg used to spend $1500 a week on milk for drinks but, due to a massive drop in coffee orders, he now only spends $500.
“You’ve got to wonder what the point is because at the end of the day, you’re not making any money and you’re just stressing yourself out,” he told the Bay of Plenty Times.
Weinberg had cut staff numbers from 18 to five and was picking up the extra work himself.
“I had to lay off staff because I just couldn’t afford the wage bill,” he said. “You get behind in paying your taxes and it becomes a really vicious cycle.
“I’m not certain about our future at all. I’ve been given a letter that said if I don’t pay my tax, the business is going to be in liquidation.”
Love Rosie has “had to become quite savvy” to stay afloat. Looking for the best food deals, cutting waste and taking certain items off the menu are some of the ways the cafe gets by.
“It’s hard because all the special added ingredients that make Love Rosie its own have to be cut down or taken out entirely.”
Continuous work on the nearby Cameron Rd project had also hurt the business by reducing foot traffic significantly, he said.
When comparing the Covid-19 lockdown to now, Weinberg said: “At least during the pandemic you get a subsidy from the Government.
“After the lockdowns, people were spending money like there was no tomorrow, it was out of control.”
Love Rosie began feeling the pinch in early 2022.
“After that summer, I think everyone spent their money and was done.”
Miss Gee’s Bar & Eatery owner Ashleigh Gee said it was difficult to compare Covid-19 to now, but “paying the bills this time around is a lot harder”.
“It was incredibly hard being shut down for eight weeks with no money coming in but when we came back it was like people had spent those eight weeks sitting around and saving money.
“With the cost of living, people have got a lot less money to go out as often.”
Gee said the increased cost of goods and overheads meant the profits they would use to hire staff could not be used.
“It’s generally me that picks up the hours,” said Gee. “I’ll do anywhere from 40 to 60 hours a week depending on how much staff I have.
“The increased cost of goods has squeezed the margin so small that it’s really tough and it makes it hard for us to provide menu items that fit everyone’s budget,” said Gee.
Gee has noticed an increase “on pretty much everything across the board” including canola oil, which has increased by $20 in the past two years. A 20-litre bottle now costs Gee $65 and the restaurant goes through “multiple bottles a week.
“We try to keep our price increases as low as possible but at the end of the day we are running a business and need to stay open,” said Gee.
The Phoenix Cafe and Bar had seen its mortgage and interest rates double since March this year and owner Ana-Marie Ward said that “now is a bigger challenge than anything Covid-19 threw at us.
“How do we survive when more is going out of our business than what’s coming in?”
Along with the strain of the cost of living, Ward said the business has an added challenge with the loss of the waterfront car park and the recent closure of Masonic Park.
“We won’t be getting those parents watching their kids from our cafe anymore and people can’t find parking to come eat at our cafe.”
“We’ve survived Covid-19, lucky us, but now we’ve got to go through all this.”
Ward is rewriting the menu after “not being able to keep up” with the food-cost increase.
“We have to adapt the menu because we can’t put the prices up at the same rate the food costs go up.”
Josh Fitzgerald, owner of Flying Burrito Brothers, Barrio Brothers and Sugo, has also had to adapt his menu to accommodate the cost-of-living crisis.
“We’ve started using chicken breast because it’s become a lot cheaper than thigh.
“It’s a fine line of at what point does it become too expensive?”
The other options are taking it off the menu, changing the way it’s done or changing the items and “you can’t sacrifice the quality of the product”.
Fitzgerald has felt the change in customer spending habits with some people who “are less likely to get a second or third drink”.
The alcohol excise tax increase, which saw a 6.65 per cent rise in July this year, was a contributing factor.
When asked about the pandemic, Fitzgerald said he would take the quieter period over the “erratic nature” of being shut down.
Covid-19 was a challenge for his staffing levels with applications lucky to be as high as five in the summer of 2021 and 2022.
“In the last couple of years, we had to reduce the hours and services we offered because we were so short-staffed.”
Fitzgerald said the past six months had seen a notable improvement due to an increased number of travellers in New Zealand.
“We did an ad recently for a chef and got around 50 applicants.”
Fitzgerald is staying positive.
“We had a really quiet winter at the Mount and with summer coming up and more people travelling, well, we’re hoping everyone wants to drink a lot of frozen margaritas.”
Note: This article has been amended to show the cafe suffered a 70 per cent drop in sales.
Harriet Laughton is a multimedia journalist based in the Bay of Plenty.
Police and ambulance staff on scene at night markets.