Hospitality and retail needs urgent funding as revenue plummets, sector leaders say

Wednesday, 16 February 2022

The New Zealand hospitality industry is battling a labour shortage which has been exacerbated by the border closure and the departure of many migrant workers. (Video first published in July 2021)

More than 70 per cent of cafes, bars and restaurants looking to cut staff or reduce staff hours to survive, according to a Hospitality NZ survey.

But it is too late for some, with popular restaurants closing throughout the country as spending at bars, restaurants and cafes plummets.

Popular Auckland restaurant Saan closed last week. Owner Krishna Botica said staffing shortages and other Covid-related problems led to the closure.

“As soon as we ended up with a community outbreak, sales dropped so dramatically that our other businesses propping Saan up could no longer do that,” she said.

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“With the realisation that we could be in red until June or July, as told by Chlöe Swarbrick, we did the maths. We’d lose everything if we kept it open, so we had to cut our losses.”

Botica’s other restaurants Cafe Hanoi and Ghost Street remain open, but her other business, Xuxu Dumpling Bar, will also close at the end of February.

Dot Loves Data analysis of last week's Eftpos NZ spending found nationally restaurant and cafe businesses were down by 23.7 per cent for the week ending February 9, compared with the same period in 2021.

Bars were down 17.9 per cent and fast food was down 16.5 per cent.

“We’d lose everything if we kept it open, so we had to cut our losses,” Saan owner Krishna Botica says.

Wellington has been hit the worst, with restaurant and cafe spending down 33.2 per cent, bars down 33.8 per cent and fast food down 14.4 per cent.

Tourist spot Queenstown was also struggling with restaurant and cafe spending down 33.2 per cent, bars down 33 per cent and fast food down 3.4 per cent.

The survey of 750 members found 50 per cent of respondents had had revenue drop by 40 per cent since the while red setting.

More than 70 per cent said they would need to reduce staff or staff hours to stay open.

About 43 per cent said they would need to access additional funding to get through the red light setting, while 16 per cent said they needed to take out additional loans to keep their business going.

Managing director of DB Breweries, Matt Wilson, said venues were reduce opening hours because they could not afford to stay open.

“We are also seeing closures across the board from operators who simply cannot continue operating at a loss with no respite on the horizon,” Wilson said.

Last Friday he had booked to go out for lunch, but the venue’s regular kitchen staff were isolating. As a result the menu was basic, he said.

“Without being asked, the venue found and booked us a table elsewhere.

“We are keen to work with the Government and officials to create a package that can support the sector,” Retail NZ chief executive Greg Harford says.

“Even in that difficult time they were thinking about the consumer experience and sending us to a place that could offer more. This is the attitude you get from hospitality operators, putting the experiences of their patrons first, even when they’re hurting. It’s our turn to return the favour.”

He said he understood the Government couldn’t save every business.

“But we are on the precipice of an entire industry facing unprecedented closures and the impact will be widely felt on both an economic and social level.”

Wilson said DB Breweries wanted a full Resurgence Support Payment and Wage Subsidy while the country was in red light setting for hospitality and tourism businesses that met the 30 per cent revenue drop threshold.

“Many operators simply won’t come through the other side of the red light setting unless support is offered right now. Not in a week. Every day that passes is sending a lot of people further and further into the red.”

The red light setting has also caused retail sales, foot traffic and confidence among retailers to drop sharply.

A Retail NZ survey found 76 per cent of its members would look to reduce operating hours to save on wages, while 32 per cent would consider making staff redundant. Sixteen per cent indicate they would close permanently.

Retail NZ chief executive Greg Harford said the red light setting plunged retailers into a deep financial and confidence crisis.

“A staggering 59 per cent of retailers have indicated that they now may not survive the next 12 months,” he said.

Sales are down 32 per cent nationally, but a third of retailers are down by more than 40 per cent, Harford said.

More than 10 per cent said their sales were down by between 60 and 90 per cent.

“This is not sustainable for the retail sector, and we have asked the Government to take urgent steps to reintroduce the Wage Subsidy and the Resurgence Support Payment. Alternatively we are keen to work with the Government and officials to create a package that can support the sector.

“In the absence of direct Government support, businesses and workers will be significantly impacted,” Harford said.

Prime Minister Jacinda Ardern said on Monday that Finance Minister Grant Robinson was working on relief for businesses, including hospitality.

'He is working on measures that are highly targeted, one-off, and short-term to address those issues where the Covid protection framework is having an impact on those businesses, and we'll have more to say on that very shortly.'