Small upturn for Wellington hospitality sales but concerns about customers numbers

Thursday, 19 December 2024

Restaurant Association members are worried about declining customer numbers as 2024 comes to an end.

A small upturn in sales in Wellington’s hospitality sector over the last three months has not allayed concerns about declining customer numbers.

The Restaurant Association’s third quarter report showed across restaurants, cafes, takeaways, pubs, bars, catering and taverns, the biggest concern around the country was customer numbers.

Olive has been a popular cafe on Cuba St for many years.

It hits home harder in Wellington where numbers of people through the door have been largely impacted by work from home rules, public sector job cuts and the cost of living.

Wellington has also been bombarded by closures recently - award winning bakery Myrtle, Cuba Street cafe Olive, (which will reopen under a new owner), Burmese restaurant Mabel’s and Apache have all announced closures in the last week.

Which comes on top of a string of closures and liquidations - like national chain Wishbone, Nikau Cafe, Bordeaux Bakery, Egmont Street Eatery, CGR Merchant & Co, and Pandoro.

The closures were blamed on anything from cycle lanes, road works, increasing costs, building closures and lack of customers.

Public service minister Nicola Wills had said earlier in the year that government workers should come back to the office rather than work from home.

Chief executive officer of the Restaurant Association Marisa Bidois says rising costs are still straining hospitality businesses.

The Restaurant Association report says there was an 8% recovery in the last quarter in Wellington although partially offset by a year on year decline of 1.5%.

The downturn in customer numbers was identified by 38% of association members as the biggest concern.

Association chief executive Marisa Bidois said the hospitality sector continued to demonstrate incredible adaptability and determination, leveraging creativity and connection to weather ongoing pressures.

“We remain optimistic that as economic conditions stabilise, the industry will recover and thrive. The Restaurant Association urges operators to maintain focus on customer engagement, operational efficiency, and workforce wellbeing as they navigate the remainder of 2024.”

Association figures show restaurants and cafes sales reached $1.8 billion, down 2.5% from last year, underscoring continued challenges for dine-in services as customers tighten discretionary spending.

Takeaways showed a slight growth of 0.3% year on year with sales totalling $1.1 billion, reflecting the sector's resilience in uncertain times.

Catering services were a bright spot with a 1.42% increase, driven by a rise in event activity.

Pubs, taverns, and bars delivered a notable quarter growth of 6.4%, supported by seasonal events and activities.

Bidois said rising costs continued to strain businesses, with a 1.2% annual increase in food prices to September 2024. Some specific items, like olive oil, had surged by 25%.

Hospitality New Zealand’s head of communication and advocacy, Sam MacKinnon, said it was no surprise profitability had been significantly impacted as the cost of goods had continued to rise and the economic uncertainty of the past 12 months had had a marked effect on consumer confidence.

“There are external factors determining where a household’s money needs to be spent – there isn’t the same discretionary income available to spend in areas like hospitality. The third quarter also captures the end of winter and start of spring – given the Wellington climate over spring, it's no surprise foot traffic was reduced.”

He said as summer arrived, members have noted improved customer sentiment. “Hospitality NZ would echo the cautious optimism that the summer months will set hospo up for a stronger trading period across 2025.”