Kielda.
I'm Chelsea Daniels and this is the Front Page, a daily podcast presented by the New Zealand Herald. It's tough out there for New Zealand's hospitality industry. The rising cost of living in the past few years has seen everyone tightening their belts, and the skyrocketing cost of food in particular has been cutting into people's disposable income, with overheads increasing at the same time as patrons are cutting back
on their spending. It's no wonder we've seen a series of beloved bars and restaurants closing their doors for good. So what's next for the industry and how can these businesses adapt to changing times. Today on the Front Page, we're joined by Herald Deputy Lifestyle Editor Johanna Thornton and aut Hospitality and Tourism professor David Williamson to talk about the state of the sector and where.
It needs to go from here.
Johanna, can you run us through some of the restaurants that have closed down so far this year?
Unfortunately there might be a few, too many to name.
Yeah, there's a few. I mean, I suppose the biggest or the most shocking was Espequre, which closed in July after thirty two years. We had Madame George on Kodunghappy Road, which was a huge loss. It's one of weba's top fifty restaurants last year. There was also Floor on k Road as well, which is a cute little wine bar. Homeland is closed down. Orphan's Kitchen Omni which is a little yakatory spot on Dominion Road. Stanley of Winebar and Milford.
We also had Conch which was more sort of a bar and restaurant, the Wine Cellar and Tiger Burger is another one that's closed.
God, there's so many. What have some of the reasons been behind their closures?
There's a few and Madame George said it was the economic downturn. Danleyev said that there were a host of reasons like the pandemic with events and strained economic conditions, and I actually saw the Restaurant Association reported in a recent survey that the main challenges businesses are citing is just customer downturn.
David, from your years of experience in the hospitality industry, is this spate of closures unusual or is it kind of par for the course.
It's sort of hard to differentiate that it is an unusual time.
I'm not sure that number.
Of closures is particularly different, but I think what is different is that people are really struggling in this sector, and I think we're going to see more closures coming through. I was talking to a couple of veterans from the industry recently and they were adding to that suggestion of what's really going on is not just the difficulties right now, but the history of really impactful changes over the last
sort of period since COVID. So you have to understand that this industry, you know, was shut down or massively disrupted for a number of years through COVID, when the boarders shut they had huge staff shortages. Then you have those weather events. Just as we're coming out of COVID and starting to recover from that, we get smashed with weather events, which was really impactful on the industry. And then you have, yeah, the high inflation, cost of living.
People have a lot less discretionary income to spend on things like restaurants, cost of goods. For these industries that record highs, they are paying top interest rates on any debt they're holding.
There's perceptions of higher crime in.
The inner city for people in Auckland who are coming in to dine out at night. So you know, there's an awful lot going on and it's just been one challenge after another. So a lot of these businesses are small, standalone, own or operated businesses. They don't have huge amounts of capital reserves to survive periods like this. So it's not so much a question I think of, gosh, why are
staurants going down? At the moment, it's a question of how on earth are they not going down given you know, the conditions that we've had over the past few years.
For decades, Aucklanders have enjoyed a long lunch in the sun at Ponsomby Institution SPQR.
But now the.
Doors are shout and that's a liquidation, owing creditors over two million dollars, yet another casualty of rising costs and people keeping their wallets firmly shut.
Johanna, can you explain to us what happened with SPQR in particular?
Yeah, well, I mean, I suppose the announcement seemed pretty dramatic when they said they were closing in July, but I think it had definitely, you know, the quality of the food maybe had dropped off in recent years and it wasn't sort of the hottest spot to be anymore where it had been in the past, and owner Chris Rupe just released a really brief statement saying that he was really sorry for the current situation and sort of
encourage people to get out there and support hospitality. It turned out they were placed into liquidation with the business owing more than two million in land revenue and it owes over one hundred thousand two staff in unpaid wages and holiday pay. And then The Herald also reported that the business that Ownsespecure withdrew nearly one point four million from the business before it went into liquidation. So I think we're going to hear a lot more about that story.
It is quite jarring when some of our favorite places close.
Hey, I mean Peter Gordon's Homeland closed this year's citing issues with renewing its lease. How often is an issue like that to blame for a space taking on a new life.
Well, I mean I heard that the problem with Homeland was there's a massive new retirement village going in there called Cracker Bay. So I think the development of that whole West Haven area didn't include keeping homeland there, So I'm not sure how often you know a lease is to blame.
Yeah, I think there's a whole range of problems like that that certainly would finish off a lot of places. But yeah, again, I think it's a more complet and a multifaceted number of pressures which brings these organizations to the edge of collapse. I think what is interesting is it's such a resilient and it's such an innovative industry.
I often describe restaurants that's extremely nimble, and so you know, at the moment where you have these raally difficult trading conditions, hospitality shows up as an area where businesses do suffer and go down, but when conditions pick up, hospitality is also the first industry to recover. We sort of go into recessionary times quicker and lower, but we've come out of them faster and higher. So it's a very nimble industry.
And Ram's just pointed out in their last report that you know, there is nineteen thousand, five hundred and eighteen restaurants still in New Zealand. It's the largest number we've ever had in the country. The growth has very flat since twenty twenty three, only zero point one percent growth and restaurant numbers. But you know, it's not an existential crisis. We're not going to certainly run out of restaurants, but it is a very real crisis for the people who
are running these businesses. And there is a risk that, you know, if we don't get out and support these businesses and think about how we can address the pressures that they're facing, that we could lose some more really good operators. And it is a loss, it's a social loss. We love these places to go out and enjoy the product. We have some of the best restaurants in the world. You know, we just got eight of our restaurants, including the top thousand restaurants in the world by least last
year in twenty twenty three. We have some of the best food, some of the best wine, world class restaurants, great places to go, and we just need to be careful that, yeah, we don't let these economic conditions damage this industry to the point that it could really cost us both in terms of tourism and our social enjoyment.
The Restaurants Associations report into the state of the set does show sales are up a five point eight percent to nearly sixteen billion dollars. The number of outlet's across the country only rose by zero point one percent. That's just an extra twenty seven nationwide.
Definitely going out less, they probably won't splurgs in the same wine, or you know, they won't have that extra cocktail.
Pretty Much every single cost that we would have has gone up over the last few years. So whether it's rent, whether it's staff, whether it's food, every part of the cafe business has gone up. We need to raise I'll turn over by about fifty percent.
We mentioned some of the numbers of restaurants there, David, is there perhaps an issue also with us having more restaurants than our population can sustain?
Perhaps, and some of these closures.
Are just a course correction to a more sustainable hospitality environment.
There is an argument that I've made around that, saying, yeah, that perhaps we don't need I always use the example of I walk up High Street and Lawn Street to the university here, and I counted one time thirty food outlets on those two streets, and I was going, you know, if that was halved, would that be a social problem. Obviously, it's a problem for the people who run these businesses without a doubt, but it could be a correction. We
could be oversupplied. One of the veteran restauranteurs I was talking to recently had just come back from overseas, and I myself was lucky enough to get overseas, and we were both commenting on the fact that, you know, New York, Milan, London, some of these cities that we're lucky enough to visit have these huge populations and fantastic infrastructure to support a.
Really vibrant industry sector.
And yeah, perhaps in New Zealand we've got too many restaurants and not enough people. But I think more importantly, we're basically constructed an economy which is proving very difficult to support things like hospitality, things like retail, things like our arts sector. If people don't have money, you know, we've got a real cost of living crisis, and people don't feel like they've got money in their back pocket to spend, it's very difficult to maintain a vibrant hospitality
and arts and retail scene. So we need some guidance from I think political areas as well to try and build an economy that will support these types of industries.
There's also the going out culture as well.
Hey, Johannah, do you think COVID and all these lockdowns have really changed the way we go out?
Well, I mean, for me, it's made me go out more. You know, I really want to get out there and support restaurants, and I really missed not being able to dine out when we couldn't. But I do think that for a lot of people, they're reserving dining out for special occasions, which is fair enough. And we get a lot of feedback at Viva Magazine that, you know, people really want to know that something's great before they'll go
out and take a risk. And I think that's where sort of our restaurant reviews really come into play there, because people can kind of know that they're going to have a fantastic time if they're dropping a lot of money on a dinner out.
I'm always checking those reviews, by the way before I go out, So I'm definitely one of those people. It's not all bad news.
Is it.
You've recently, Johannah done a story on some of the restaurants that have actually opened this year.
Well, that's the thing. I mean, I'm actually blown away by how many new restaurants open every year and just this year there were twenty on my list. So we had San Ray on Pontsby Road, which is from the team that brought us Kasidor Restaurant. We've got Bodega Delian Bistro, which is also on Pontsby Road. There's a new amazing little French wine bar in Birkenhead called on Pinard. Maybe the most ambitious new opening of the year is Queen's Rooftop, which is this amazing rooftop bar on top of one
Queen Street. And also in that building is Advia restaurant from chef Gareth Stewart, which opened in January. There's more. There's First Mates, Last Laugh, which is due to the Tabron's new glamorous spot in West Haven opening this week
at the Marriott Hotel. But I think a lot of things that these places have in common is that they're actually from restaurant tours who maybe already have a restaurant or they've got the backing of a hotel, so there's a bit more of the knowledge and sort of money behind them, which is quite an interesting trend I'm seeing.
What do you think hospitality needs to adapt and survive or is it fine as it is?
David No, I think yeah.
From a lot of the conversations I've had with practitioners, there's this real feeling that these conditions are driving a need for innovation and fundamental change in the way that hospitality businesses run. I think you made a great point
there about the upper end. There are always new restaurants coming in and the upper end of the markets doing quite well still people going out for special occasions, but that kind of middle area every day dining out thinking oh, yeah, I don't want to cook tonight, so I think I might just go out and have something to eat. That's where it's really struggling. And there's been some made changes around your people drink. Working from home has affected to
lunch trade, transport issues. So I think in order to be really successful in this type of environment in the future, there may be a fundamental need to move more towards that casual, reasonably priced, fast turnover dining where perhaps you are getting people to come through your place and do three or four sittings in a night, moving those tables, turning those tables over to really maximize how you're going to get your revenue through the door, while the upper
end can do the formal three hour meal, high cost, great reviews, really expensive thing. Well, that middle range I think really has to think about moving into that space.
When I was in Milan, that everyday's space.
People living in apartments there eat out all the time, and they will go and.
Have a casual meal it's reasonably priced.
And then leave within an hour, and then next person will come in and move on to that table, and so wondering whether that will be something that needs to be really explored.
But I think people are.
Going to have to have really sharp skills in terms of pricing and keeping an eye on costs. It's not only that costs are going up dramatically, but also they're really variable, and so if you don't have a razor sharp eye on adjusting your menu pricing as costs move around, you can get wiped out really quickly. I think people are going to have to be innovative about how they think about alcohol sales. Those have gone down a lot. People aren't drinking as much as they used to, So
how do you innovate around that? You know, and as Danny Mayro I said that the curse of restaurants is it's not one big thing, it's a thousand little things. It's like a eight sided Rubik's cube. You're constantly moving and trying to adapt to the market and the changes going on, and it's very, very tricky. So I have absolute faith that the industry is going to innovate, survive, and come through really well. Of places go out, new
places come in. And I guess one really exciting thing is that you employment's up seven point three percent in the sectors, so those really brutal.
Staff shortages are starting to.
Weaken and we're seeing our whole new generation coming in to fill those roles, and that will really help with consistency and getting on in the future.
The top challenge currently for our businesses is customer downturn, so that sort of a start contrast with last year it was rising costs. A recent survey from our members around how they're faring in twenty twenty four told us that around seventy eight percent of them are worse off this year than they were last year, when in twenty five things will start to get better. Well, that's another.
Question, Jehannah, what do you think needs to happen?
Well, I mean I think that restaurants already are trying really hard to adapt. I mean many of them do sort of pop ups, labs events, you know, they do special menus or set menus. I'm noticing a lot of
restaurants opening for lunch on the weekend. You know, they're really trying to provide something new for their diners, or they're totally changing their business model, like for example, Sid Satowat earlier this year announced that he was scaling back the fine dining restaurants Sit at the French Cafe and turning it into a Nie, which is more of a modern Pan Asian restaurant where you can drop in for a you know, an entrain, a cocktail or have a big meal, and then turning Sit at the French Cafe
into a smaller restaurant and reverting it back to the French Cafe. So people are trying to adapt and try new things to see what will work. So I think we just got to watch the space really and.
There's real rise. Actually I'll end on this on social media. Hey, I'm on TikTok.
I spend way too much time on tech talk, and I know I'm probably too old to be spending.
So much time on TikTok.
But I get so many good restaurant recommendations from people on tech talk, and I've noticed around the corner from my house there's a cafe and I was wondering why there were lines outside every Saturday and Sunday, and it's because it was on TikTok. David, do you think that that's really something quite fun and exciting for the industry?
Absolutely?
Yeah. I mean, you know, word of mouth has always been the absolute driver of great success in restaurants, and the technology that shares that word of mouth will change and has changed, but that's really how it's always worked, and now it will always work. People sending out the word that this place is great, you need to go and check it out. And yeah, I mean there's a number of places as I walk up the town where
you see lines. New Zealanders aren't renowned for lining up for things, but when you get it right and their high quality and their priced right, and they have that buzz around them, it's really exciting to see that people are willing to line up and wait.
To get the product. It's super exciting.
Is that something you've noticed as well, Johannah.
Yeah, I mean Instagram is definitely a go to for meat, for finding out new places to eat and drink, and I think it really fills that gap where, you know, some of these bigger restaurants are the ones maybe get written about in magazines or online, but you know, the little cafe or the little hole in the wall or the little noodle shop. I think Instagram or TikTok, like you say, is a really great place to shine a light on those guys.
Thanks for joining us, guys. That's it for this episode of the Front Page.
You can read more about today's stories and extensive news coverage at enzed Herald dot co dot nz.
The Front Page is produced.
By Ethan Siles with sound engineer Patty Fox.
I'm Chelsea Daniels.
Subscribe to The Front Page on iHeartRadio or wherever you get your podcasts, and tune in tomorrow for another look behind the headlines.