'Pretty gruesome': Restaurants call for more support in red setting

Thursday, 10 February 2022

Paul Day, left, of Machete Coffee, says things were ‘gruesome’ when the country first went into the red setting.

Paul Day, owner of Machete Coffee in Wellington, has watched patronage dwindle as the country shifted up and down alert levels over the past year.

“When we move in and out of different alert levels or different traffic light settings, people will tend to be very quick to stay away and increasingly slow to return, if at all.”

Last year, the business traded with revenue 20 per cent down on normal, he said, as more people opted to work from home.

“It gets a little worse each time. When we went to red we moved down to a 75 per cent dip. It did crawl back to about 50 per cent, where we’ve sat, but the first few days were pretty gruesome.”

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He said it was likely that the business would have to restructure and some staff, mostly students, would have their hours reduced.

He said the wage subsidy and support payments when the country was in the alert level system had given time to make decisions, but those were no longer available.

The country shifted into the red setting on January 23, after Omicron was discovered in the community, limiting the numbers of customers in cafes and restaurants.

Marisa Bidois, chief executive of the Restaurant Association, said Day’s experience was not unusual.

A survey by her organisation in the last week of January showed 55 per cent of members were experiencing significant drops in revenue, with an average drop of 30 per cent, on top of a 30 per cent reduction in 2021.

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Bidois said this was backed by Eftpos data which shows a 30 per cent decrease in transactions in January, with hospitality being one of the hardest-hit sectors.

“Whilst the red light setting is still a green light for diners, sadly the government modelling and current messaging is having the adverse effect on patronage,” Bidois said.

More than half of respondents had experienced more cancellations than usual and 74 per cent said customers were hesitant to dine out.

“Now we are in the traffic light system, there is no further financial support offered to businesses so we really need people to understand that dining out is safe,” Bidois said.

“The message from the industry is clear. Continue to dine out.”

She said the Government should reintroduce the wage subsidy and resurgence support payments for businesses that were most affected by the restrictions, such as hospitality.

Gail Hunter, of Papa’s Italian Eatery. agreed more support was needed.

“The health department also discourages people from restaurants in the media by saying they are dangerous for Covid-19. It has been two years of hardship in Covid and we are still restricted. When is it going to end? How much do you borrow? How do you plan ahead?”

Restaurant Association Auckland branch president and owner of four restaurants Krishna Botica had temporary closed one business.

Botica said: “Our revenue is less than last year which was down on the year before. It’s dire. We are down 50 per cent on where we should be. Pain points are everywhere. We worry that we will lose people from the industry over this.”

Bidois said hospitality businesses had some of the most rigorous operating settings, with vaccination mandates for both staff and diners as well as mask mandates and distancing between tables.

“The messaging of fear continues to be an issue for our industry and if the government does not change this, it should be looking at offering financial support to those industries that continue to suffer as a result of it.

“Our industry cannot work from home and we still await feedback from Government on financial assistance for businesses that need to close as a result of positive cases among their workforce or as a result of exposure via a customer.”

In a statement, Finance Minister Grant Robertson said he had received advice from Treasury that the economic impact of the red setting was estimated at 2 per cent to 5 per cent of gross domestic product (GDP), compared with 4 per cent to 6 per cent under alert level 2.

“In terms of support, the Small Business Cashflow Loans scheme is still open for applications until December 2023. The Commissioner of Inland Revenue is also able to offer deferred payments on some tax obligations.

“The Short Term Absence Payment and Leave Support Scheme are also still in place. The Government is continually monitoring the impact of the Covid pandemic on businesses, including up-to-date sales data. As with the recently announced arts and creative sector package we are considering whether targeted support for some sectors is necessary.”

Day said he would try to move the business more online – but it was tricky to work out how to deliver a cup of coffee via the internet. He said he was lucky that the business was not carrying debt but it would probably require the use of the owners’ savings.

Access to rapid antigen tests would also be a “godsend”, Day said. “If one or two of us get Covid we are pretty much shut down for 24 days. RAT access and flexible quarantine times would be so helpful especially as we don’t have the resources to source or influence such things.”