Loyalty no longer enough to save institutions like SPQR, Smith & Caughey’s

Wednesday, 17 July 2024

Stuff looks at ten of the big hospitality and retail closures in Auckland in 2024.

“I’m really sorry for the current situation.”

It was a sad, almost feeble ending for one of Auckland’s iconic institutions. No party, no fond farewell; just a three-sentence message posted on Instagram.

'I just wanted to say to everyone that I really appreciate the support,“ said SPQR owner Chris Rupe. “I know you loyally share the love I’ve had for SPQR over the past 27 years.”

Rolling Stones frontman Mick Jagger dines out in SPQR in 2009.

The Ponsonby Rd institution first put out its white table-clothed tables in 1992 and always had grand ambitions. It was named after the initials for the Latin phrase, ‘The Senate and Roman People’.

But like its namesake, the Roman Empire, it too collapsed.

At the peak of its popularity, it was the place to people-watch over a long lunch and to be seen doing so.

Sally Ridge and daughter at SPQR filming their reality show The Ridges in 2012.

In the noughties, Mick Jagger was spotted enjoying a glass of wine and a margherita pizza. Boy George and Duran Duran were snapped wining-and-dining at the peak of its popularity, along with local A-listers and aspiring C-listers wanting to be noticed.

For food influencer turned restaurateur Albert Cho, SPQR was a dirty vodka Martini pit stop before a night out.

Cho and his business partners at Namu Group opened restaurant Tobi in November – 200m down Ponsonby Rd from SPQR.

Albert Cho has almost 100,000 followers on his Eat Lit Food Instagram and has recently opened a restaurant on Ponsonby Rd.

He’d noticed there were fewer people at his nearby neighbour’s famous outdoor tables for a while so the announcement last week that it had closed for good wasn’t a surprise but still a shock.

Food inflation, staff shortages, soaring interest rates, and patchy customer demand are all pushing hospitality into survival mode.

“I always thought they’d be there forever.”

Longevity and customer-loyalty is no longer enough – Cho, in his 20s, says there’s a generational shift underway in dining out.

“SPQR did kind of miss my generation. I would say that people that are a lot older than me speak of SPQR much more fondly with the most crazy memories.”

While those set in their ways have their comfortable favourite haunts which they’re loyal to, Cho says younger generations like to chase trends and be at “the spot that everybody’s at”.

Which means restaurants have to constantly innovate and promote.

At Tobi, Cho says they’ve implemented a late 9pm happy hour to keep tables spending and every week there’s a new dish.

They’ve also leaned more heavily on the nearly 100,000 Instagram followers of his Eat Lit Food account than expected. When the restaurant’s full, Cho posts a picture or video to show others it’s the spot to be.

Smith & Caughey’s on Auckland's Queen St will close for good next year.

The initial plan was never to have Cho’s personal brand so attached to the restaurant because of fears if – or when – his relevance faded, so too would Tobi’s.

“But because we are in such dark times in the economy we just have to use anything that we have so that’s why we’ve been going really hard with just including me into all of the communications about the restaurant.”

Chris Wilkinson, managing director of First Retail Group, says the Reserve Bank has been too aggressive with its rates hikes.

Both hospitality and retail are suffering from the same ills of high interest rates and a downturn in spending which is crippling the economy but they are feeling it more acutely because their businesses rely on Kiwis having extra cash for discretionary spending.

Retail expert Chris Wilkinson said many in the sector believed the Reserve Bank had taken its engineered recession too far by hiking interest rates for too long. A strategy the central bank deployed to cool record inflation caused by its rock bottom cash rates during Covid to keep spending up.

The central bank had an obligation to consider both the economic and social impacts of its actions, he said.

“I don’t think they [the Reserve Bank] have been as closely in touch with these sectors to understand the impacts that are going on and that for many businesses they’re having to make some rapid and decisive decisions”.

Companies Office data on liquidations, receiverships and voluntary administrations shows this year has seen the highest number of companies folding in a decade.

In the year to June, 1255 companies shut up shop – the last time numbers were that high was in 2014 on the comedown from the financial crisis which hit New Zealand the hardest.

But the challenges facing business – especially retail – are even more complex than a decade ago with the rise of online shopping and the ability for shoppers to buy direct from suppliers, Wilkinson said.

Mega China-based retailers like Temu and Shein are also sucking up the little extra money Kiwis have at the moment. Figures show there’s been a 20% increase in direct imports of low-value goods by households.

That leaves little room for treats like a woollen suit from Smith & Caughey’s or a long lunch at SPQR, Wilkinson said.

And a lot of those businesses whose customers still have the money for luxury experiences may not even be in the country. A high-end Cambridge business told Wilkinson that “now travel’s back again, 50% of my customers are actually in Europe right now”.

Wilkinson didn’t expect to see many other iconic brands collapse or close but said there were still tough decisions on the horizon – like The Warehouse Group consulting on a restructure at its head office and, as leases came up for renewal, whether stores would reconsider their options.

“I think there is very much a wait-and-see game going on with business because it can’t last forever.

“But it’s a question of how long the businesses can last.”