Hospitality carnage on the cards for Christchurch as wave of new premises rolls on in

Friday, 23 March 2018

Chopped, on Victoria St, has recently closed down.

Christchurch hospitality businesses are increasingly worried about surviving competition from a slew of new premises.

With at least 30 more bars and eateries due to open in the CBD over the coming months, there are dire predictions about financial carnage as the winter slowdown begins to bite.

The former Chopped premises is now up for lease again.

New Zealand Restaurant Association chief executive Marisa Bidois said confidence amongst their members had picked up around the country, but not in Canterbury, which had recorded the biggest growth in new businesses.

The region had more than 2000 hospitality businesses in 2017, up 6.4 per cent on the previous year.

The Good Goat on Victoria St has closed after just a few months of operation.

The Good Goat was open only a few months before closing its doors 'due to unforeseen circumstances'.

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But it was also the only region where sales fell – down 0.2 per cent to $1.1 billion.

The latest quarterly report from commercial real estate agency JLL is cautious about the short-term outlook for hospitality and retail.

It said the core CBD had a vacancy rate of just over 18 per cent and – with the opening of new bars and restaurants on The Terrace, and another 17 in the new central Hoyts cinema complex – residents were spoilt for choice.

In the absence of substantial disposable income growth for Cantabrians, the dollars spent at these new outlets would likely be at the expense of premises in the CBD fringe and suburbs, JLL associate director Tom Barclay said.

'I expect you will see some [premises] that are currently occupied which will not be occupied by the end of winter.

'I'm sure the big shiny new stuff in the middle of town will go really well, driven by office workers during the week and the people who want to be seen there during the weekend.'

Those in the 'no man's land' between the central city and the suburbs could struggle though, and a boost from the opening of the new convention centre was still 'three winters away'.

Hospitality New Zealand's Canterbury regional manager, Amy McLellan-Minty, said the city did not have the resident population to support the number of premises, and casualties were a certainty.

'I do think within 12 to 18 months there will be some significant closures unless something happens around bringing more people to Christchurch.'

Her concern was with new operators who entered the industry with a 'rose-tinted' view of it and failed to do their homework.

Recent casualties have included old hands like well known chef Jonny Schwass, who this week admitted misapplying tax payments totalling more than $300,000 before his company went out of business last year.

There have also been several cases of new premises – such as The Good Goat gastro pub in Victoria St – closing their doors within months of opening.

Minty said the lack of events in the city was a massive problem.

'We are very jealous of Dunedin getting Ed Sheeran . . . If we had events coming on a regular basis, weekend after weekend, that would help with patronage.'

The timing of events was also crucial because bars and restaurants were hard hit by the loss of Valentine's Day custom due to a clash with the Stuff-run Night Noodle Markets, which ran for 10 nights this year.

'It seriously took away custom from licensed premises into Hagley Park.'

Barclay said getting more people living in the central city was perhaps the most important element in achieving a fully functional CBD.

He believed one of the factors holding back residential development was its high cost in relation to nearby suburbs.

'For $400,000 you can buy a free standing house with a section that's five to 10 minutes drive to the CBD.

'Why would you pay $400,000 for a new two-bedroom apartment in the middle of a construction zone?'