The Shout Magazine (New Zealand)

Discretionary spend downturn continues to hit restaurants says RANZ

Discretionary spend downturn continues to hit restaurants says RANZ

The current New Zealand cost of living challenges are presenting additional obstacles to hospitality businesses that once were thriving.

The Restaurant Association of New Zealand says it is receiving growing feedback from businesses about decreased patronage, which, combined with the escalating costs of goods and labour, is significantly affecting the industry.

As a sector heavily reliant on discretionary spending, hospitality is often among the first to feel the impact when people tighten their budgets. A recent member survey highlights this as the single biggest challenge facing businesses in this industry. An astonishing 35 percent of respondents pointed to “managing the customer downturn” as the predominant issue, echoing the profound impact of the cost of living on the industry.

“We are becoming increasingly aware of the many businesses currently struggling to stay afloat. Many are still burdened with debt accrued during the pandemic, which amplifies the challenges they face,” said Restaurant Association CEO Marisa Bidois.

Marisa Bidois, CEO of RANZ.

The survey also shed light on various other challenges faced by businesses in the sector. Twenty percent mentioned “managing labour costs” as a significant concern, while 11 percent cited “managing food costs” as a pressing issue. Additionally, 10 percent expressed worries about “staff shortages,” and eight percent grappled with “fixed operating costs.”

Business confidence has witnessed a notable decline, with 43 percent of respondents expressing the belief that business conditions for their companies will remain unchanged over the next 12 months. Meanwhile, 30 percent hold the view that conditions will worsen during the same period. In contrast, only 27 percent of respondents maintain an optimistic outlook, anticipating improvements in the coming year.

“In the spirit of resilience and innovation, many businesses are actively adapting to overcome the prevailing challenges. These adaptations include crafting enticing specials and creating unique dining events to attract and retain customers,” continued Bidois.

“At the Association, we maintain a cautious optimism for the upcoming Christmas and summer trading season, as domestic and international tourism are expected to regain momentum. However, the challenges our industry faces are immediate, and many businesses are currently navigating turbulent waters.

“We know that times are tough for consumers at the moment but we do encourage people to support their favourite establishments however they are able. This support isn’t just about a meal or a night out; it’s about contributing to the very survival of these businesses and preserving their place in our communities.”

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