There is no denying the devastation of Covid on New Zealand's hospitality industry. Almost every day another well-known or much-loved restaurant or café has been forced to close its doors permanently. This is alarming. But rather like the end of the rainbow, it offers promising prospects for investors and job seekers.
In New Zealand since the 1960s, a vibrant and innovative culinary industry has emerged. Over time, New Zealand's superstar culinary rise has taken the prawn cocktail to new heights.
Now, Kiwi chefs such as Michael Meredith, Monique Fiso, and Matt Lambert forefront some of the best food and wine in the world. But while Covid has highlighted innovation such as home deliveries and cafés serving coffee via model trains, with so many closures, innovation can only go so far.
This is where investment can help.
There is a famous quote possibly misattributed to Baron Rothschild that says "buy when there's blood in the streets, even if the blood is your own". In this Covid environment, the metaphor is not lost. New Zealand's hospitality industry is haemorrhaging money. Hospitality business owners are borrowing heavily simply to stay afloat - in spite of government efforts to prop them up.
Now is the time for investors to seriously consider the hospitality industry as an investment. New Zealand is currently battling the Omicron variant, but the pandemic, like all other pandemics, will eventually pass. Then, like before, there will be a boom in the hospitality industry that will be fuelled by eager consumers who can freely return to their favourite food and beverage outlets with money to spend.
Now is the time to invest in an industry on its knees: hospitality.
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Return on investment for restaurants varies from a 3 per cent to a 20 per cent return, in very well-managed cases. While many restaurants may be at the lower end of that spectrum, investors should consider something else: the positive social aspects of investment.
The thinking is not new. The nineteenth-century Austro-Hungarian economist Karl Polanyi proposed that businesses and their profitability are not determined by market prices or expectations of individual gain, but by notions of community benefit, and one's place in that. Polanyi's position speaks to the very heart of hospitality.
Concepts of social enterprise, within the business practice, have changed perceptions of what constitutes a healthy bottom line. Today, while profit is important, astute investors take into consideration sustainable practice, environmental impact, and how businesses can be part of communities.
Now is an opportune time for angel investors and other high-net-worth individuals to approach their favourite hospitality business and offer the owner a silent partnership or a minority shareholding. The benefits are both economic and social. However, for the hard-nosed businessperson who measures profit only by dollars, the economic boom in the hospitality industry will reward them more than enough.
The Covid pandemic also provides the opportunity for those entering the employment market, or reconsidering their work path, to reimagine hospitality employment as a professional and satisfying career path. Many young New Zealanders still consider hospitality jobs as something do while they wait for their real career to develop, but they shouldn't as the service industry overseas is already seen as a profession, in countries like France and Italy.
The time is right to invest in training oneself in order to maximise, like financial investors, the boom-time opportunities that the post-Covid hospitality world will no doubt bring.
• Dr Lindsay Neill is a senior lecturer in hospitality management at the Auckland University of Technology.