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The hospitality sector made record sales over the past year, but it has not been easy with rising costs eating into profits.
The industry posted record annual sales of $16 billion in the year ended in June, the Restaurant Association said, despite a tough year. Operators reported they were working harder than ever to keep their businesses running, amid reduced consumer discretionary spending, rising food prices and escalating wage pressures.
"Every dollar of the 1.4 percent sales growth over the past year has been earned against substantial cost increases that continue to pressure margins across the sector," association chief executive Marisa Bidois said.
She said the association was concerned changes in consumer behaviour may represent permanent shifts, requiring operators to rethink business models and embrace greater efficiency, technology, and customer engagement.
"Hospitality cannot simply pass costs on to customers.
"We need supportive policy settings, including immigration pathways aligned with industry needs, investment in major events that drive visitation, and initiatives to bring people back into our city centres," Bidois said.
Despite the challenges, she said there were genuine reasons for optimism, with lower interest rates expected to eventually boost household discretionary spending.
Food price inflation rose 4.6 percent in the year to June 2025, leaving consumers struggling to pay rising rates, insurance, rents and everyday living costs.
Bidois said dining out was often one of the first expenses to be cut.
"While the Reserve Bank's recent OCR (official cash rate) cut to 2.5 percent signals potential relief ahead, operators report no immediate change in consumer spending," she said.
The report indicated some regions of the New Zealand were outperforming others, with export-driven and tourism-focused regions leading the recovery, while major cities remained subdued.
Takeaway food services sales rose 2.2 percent to $4.4b, while catering sales also rose 2.2 percent to $1.3b.
Pubs, taverns and bars sales rose 1.7 percent to $2.1b, though cafés and restaurants sales rose just 0.3 percent to $7.8b.
Hospitality employment reached a record 146,300 in 2024, but the shortage of skilled kitchen and senior front-of-house staff continued to drive wage inflation.
The downturn also saw many operators respond to rising costs by simplifying menus, cross-training staff, and investing in training and professional development.
