28 Mar 2024

Rising costs, working from home blamed for hospitality struggles

6:04 pm on 28 March 2024

Rising costs and cash-strapped consumers are leaving those in the hospitality industry in serious trouble.

It has been closure after closure for restaurants and cafes around the country. But despite many reporting more customers over summer, it looks to be a long cold winter for others.

Restaurateur Al Brown said a lot of people in the industry were hurting and many were just keeping their heads above water. He said it was hard to get ahead.

"Wages have gone up something like 38 percent, and food cost is up at least 20 percent. We're doing it hard out there. A lot of us feel like we're in mud."

Stats NZ said restaurant and ready-to-eat food prices were up 6.7 percent in the year to February.

But it was not just rising costs hurting them. Brown said the number of people working from home was also affecting people's bottom line.

Al Brown

Restaurateur Al Brown. Photo: supplied

Landlords and leases were also forcing businesses to close. Auckland restaurant and cooking school Homeland was closing after its landlord sold the site to developers. Chef Peter Gordon set up Homeland with Alastair Carruthers in 2020.

"We've been trying since the end of last year to find alternative places and there's just sort of nothing around," Gordon told Checkpoint.

Chef Peter Gordon

Peter Gordon. Photo: Supplied

He said adding to the challenge was that their current venue was a "bespoke" space. But he said they had every intention of continuing the business.

"It is, which part of the business do we focus on if we can't find the perfect spot?"

Wellington restaurant Hiakai also closed its doors this month.

"We wanted to shift our focus on to other endeavours that we've been working on outside the scope of the restaurant and pursue other opportunities," co-owner and executive chef Monique Fiso said.

But the decision also coincided with the landlord wanting to sell the building.

'Very resourceful sector'

Restaurant Association president Mike Egan said despite the challenges the industry was facing, they would be resilient.

"We're a very resourceful sector and we'll get through somehow," he said. "We're not going away, we're here to stay and we're here to grow."

He said while some places were closing, there were also others opening. One such place was Tex-Mex cafe Sheppards Corner on Auckland's North Shore.

Owner Hamish Pinkham said they decided to open the brick-and-mortar café after running the Bayswater Markets the last few summers.

"We've noticed that neighbours are craving a sense of community, somewhere to gather, somewhere to meet and have some fresh food and coffee and converse and so we've brought our ethos to Sheppards Corner."

Pinkham said they had a "clear vision of what we're trying to achieve and we know there's a gap in the market in our neighbourhood".

He said they were being sensible in the way they approached the venture and were keeping overheads low.

"We've had a really supportive and creative landlord who's helping us set up and some support from our suppliers, and we're really excited about a new fresh offering for our community."

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