Customers the 'obvious losers' as hospitality businesses face increasing costs

Restaurant Association chief executive Marisa Bidois. Photo / Doug Sherring.

Be prepared to pay more for food and coffee as many hospitality businesses struggle to afford increasing costs, the Restaurant Association of New Zealand warns.

Lack of skilled employees was ranked as the number one challenge and managing wage costs came second for respondents to an association survey.

The association, which represents more then 2200 hospitality businesses across the country, asked members what they thought would be the biggest challenge facing the industry this year.

"With changes to employment law including the reversal of rules around 90-day trial periods and more prescriptive rest and meal breaks, hospitality owners are having to be increasingly creative to keep their businesses afloat," said Marisa Bidois, the association's chief executive.

"Skilled employees play a crucial role in supporting the shortfall of workers in the industry, so it is important that the industry can continue to employ migrant workers where no suitable New Zealand candidates can be found."

About 40 per cent also said legislation was a key challenge.

"The Government plans to lift the minimum wage by around 6 per cent per annum over the next three years which will leave New Zealand with the highest minimum wage relative to average income in the OECD," said Bidois.

She said automation was not a viable option for the industry, which relied heavily on people.

Bidois said the survey indicated that many would simply not be able to afford the increased cost.

"The obvious losers are the customers who will ultimately pay the price for increased prices on menus," Bidois added.

Despite the challenges, about three quarters of respondents remained optimistic or unchanged about the next 12 months.

Immigration Minister Iain Lees-Galloway said he encouraged the association to work with members to ensure the jobs they offered were "attractive enough".

"The immigration system is there to fill genuine skill shortages," Lees-Galloway said.

"Businesses that can demonstrate that they are offering competitive rates of pay and employment conditions, but are still unable to attract the people they need, can expect to have the opportunities to employ migrant workers."