From hard times to high hopes: The realities of Canterbury’s hospo sector
Wednesday, 7 August 2024
Our hospitality industry has faced a double blow — first Covid, then a recession. How are local businesses holding up? WEI SHAO reports.
For Oscar Godoy, business is “barely hanging on” and he’s desperately waiting for the increase in diners he hopes will arrive in spring.
The income he was getting at his vegan cafe in Addington, Christchurch, was less than half of what it was last summer, he said.
“The main challenge is the cost of food. Living expenses are so high that I am constantly searching for the cheapest prices [from] anywhere I can.”
Godoy, who owns The Others Cafe, said it was “ridiculous” that items were sometimes cheaper at supermarkets than from his wholesale suppliers.
“I used to get a 3-litre box of olive oil from Davis for around $68 to $70 including GST. But now I go to Pak’nSave to buy three 1-litre bottles [of] Pams olive oil in sale. It's about $20 cheaper.”
Despite his soaring costs, Gadoy said he remained optimistic.
“We are losing money, but we know we can recover later because in the summer we did really great.”
Running a small business for more than three years had given him insight into his customers' struggles, he said.
“Some of them don't really go out to eat because they don't have the money to spend on eating out. Everything is so expensive.”
‘But I see great potential now’
Pengfei Song, owner of Jinweide Lanzhou Beef Noodle restaurant on Riccarton Rd, has been battling a staff shortage “for some time” with little relief in sight.
Since opening at the end of May, his restaurant has created quite a stir, selling over 500 bowls of noodle soup per day.
“It’s not hard to find a waiter or waitress, but finding someone experienced, highly proficient, and good at handling customers' needs takes time,” said Song.
To manage the bustling business, Song's university friends have flown in from China and Canada to help.
Song himself, who runs an architecture firm in Auckland, visits Christchurch at least a couple of days every fortnight.
“It’s a very labour intensive sector. It’s also very competitive. But I can see great potential now and here on Riccarton Rd,” Song said.
“Riccarton Rd is promising. It can be the next Dominion Rd in Auckland, with more powerful players getting in,” Song said.
There are “already a bunch of established businesses like Dragon Express, Joyful and Benson”, and some new fusion food places including Jinweide on Christchurch's busiest road, Song said.
“To survive on Riccarton Rd, we [restaurateurs] need to do fast food, because our customers are those who work, study, and shop nearby. Food needs to be tasty, and service needs to be quick,” he said.
His noodle place doesn’t serve alcohol because they “want to keep the customers rolling in”.
Rather than dwelling on rising living costs and customers' frugality, Song focuses on the large population base in the biggest city in the South Island and people’s craving for tasty food.
“The success of Jinweide shows that Chinese people in Christchurch crave authentic home food. The demand is huge, and the market is there,” he said.
He told The Press he’d been considering opening another restaurant on Riccarton Rd, “doing fast food, of course”.
According to the owner, knowing your market is crucial. “Riverside caters to a different crowd. It's a well-organised centre for relaxed diners and weekend gatherings.
“But success on Riccarton really comes down to positioning yourself correctly in the market,” he said.
Niche restaurants struggle to stay afloat
After four months of running her dream project, the owner of Villa 23 Café decided to close it permanently in March last year.
“I had to shut down the restaurant due to a medical emergency back home,” said Sheetal Bhatt.
“It was my first business in New Zealand. I put all my time, money, and effort into it. …We were struggling, but shutting it down was not what we wanted.”
The vegan and vegetarian café in Riccarton was known for its unique offerings, featuring dishes without garlic, onion, or coriander.
“It wasn’t a good decision from a business perspective. The café needed to cater to everyone because, at the end of the day, you still need to pay your bills,” reflects Bhatt, who has since relocated to Queenstown and now works as a chef assistant there.
“Running a vegan café is incredibly tough. Maybe having a vegan chopping board in the kitchen and serving a wider customers would have been a better option,” she said.
Other vegan cafés in Christchurch, including XOXO Cafe (which closed in December) and Bonobo (which closed last month), have also shut down in recent months.
Possibly indicative of a wider trend, KIND Café & Eatery, a mostly vegan café in Auckland, is adding meat to its menu in order to stay afloat.
135 more food outlets than pre-Covid
About one-quarter of the revenue for food and beverage sector - which includes cafés, restaurants, and bars - comes from international visitors. By contrast some 56% of the revenue for the accommodation sector relies on international tourists.
According to the latest data from Tourism Evidence and Insights Centre, a tool developed by the Ministry of Business, Innovation and Employment, the June 2024 month proved to be sluggish for most of the country, with total guest nights dropping by about 3% to 2.2 million.
Domestic guest nights fell by 4% to 1.62 million in June this year compared to 2023. International guest nights saw a modest decline of 1%.
At the regional level, Rotorua continues to demonstrate one of the strongest recoveries in terms of guest nights, while Queenstown still has the highest average annual occupancy rate.
The Restaurant Association’s latest hospitality report, using Statistics NZ data, reveals that Canterbury, excluding Kaikoura, now has 2451 cafes, restaurants, bars, clubs, and takeaway outlets - about 135 more than pre-Covid.
Nationally, for the year ended February 2023, there were 19,518 hospitality outlets, an increase of just 27 outlets over the previous year.