Price hikes boost sales for businesses
The hospitality industry experienced a 4.2% increase in sales in the last quarter of last year, according to the latest quarterly update from the Restaurant Association.
The association that represents restaurants and hospitality businesses across the country said the industry made total sales of $4.12 billion across October, November and December.
Restaurant and takeaway prices rose 6.7% over the December quarter, and the cost of dining out continued to rise – up 7.2% – in March 2024.
Despite inflationary costs continuing to plague the industry, association chief executive Marisa Bidois said the fourth quarter of last year saw operators on the West Coast and in Queenstown performing notably well. This was driven by a return of tourists and better weather.
The restaurant and cafe sector experienced a 3.6% increase in revenue over the quarter, while pubs, taverns and bars faced a slight decline.
Bidois said a large portion of sales increases during the quarter was due to inflation and menu price hikes rather than “a genuine increase in profitability”.
She said the industry was demonstrating “remarkable resilience” in the face of ongoing challenges, but the typically quieter winter months ahead could throw up more challenging conditions for operators.
Long-term infrastructure projects, including ongoing work for the City Rail Link in Auckland, had continued to affect the industry by reducing foot traffic and accessibility in many regions, and some operators were concerned that Auckland Transport’s introduction of 24/7 paid parking, and eliminating free paid parking during off-peak hours, would deter people from driving into the city to dine out.
Disruption such as burst water pipes in Wel lington and protests in Christchurch closing streets was also affecting hospitality opera tors.
Bidois said some businesses were bucking trends and doing well despite the economic conditions but, for many, particularly city cen tre businesses, they were finding conditions challenging on top of trying to recover finan cially from the pandemic years.
“With the high interest rates that a lot of households are experiencing at the moment that puts pressure on household income, and therefore that flows on to people’s willing ness to go out.”
A recent survey of Restaurant Association members found that a downturn in customers was the biggest challenge operators were fac ing in the March quarter.
“Operators are seeing people dine out less frequently, but also a change to their dining habits as well. Spending less per head, people may still be dining out but maybe sharing an entree and a glass of wine each instead of a bottle,” Bidois said.
“Many businesses are concerned about the quieter times ahead, and we’re hoping that Kiwis will still continue to dine out – we need them to continue to visit their favourite locals.”