The latest quarterly report from the Restaurant Association of New Zealand highlights mixed performance in the hospitality sector as businesses continue to navigate persistent economic challenges.
Despite annual revenue growth of 2.6% year-on-year (YoY), quarterly sales revenue in Q3 2024 saw a slight 0.8% decline compared to the same period last year. Total sector sales reached $3.83 billion for the quarter, showcasing both ongoing pressures and areas of resilience.
Key insights into sector trends reveal a varied performance:
- Restaurants and Cafes: Sales reached $1.8 billion, down 2.5% YoY, underscoring continued challenges for dine-in services as customers tighten discretionary spending.
- Takeaways: Recorded slight growth of 0.3% YoY with sales totalling $1.1 billion, reflecting the sector’s resilience in uncertain times.
- Catering Services: A bright spot with a 1.42% YoY increase, driven by a rise in event activity.
- Pubs, Taverns, and Bars: Delivered notable QoQ growth of 6.4%, supported by seasonal events and activities.
Performance across regions was similarly mixed:
- Queenstown-Lakes: A standout with an 8.64% YoY and 23.01% QoQ growth, fuelled by strong tourism and event activity.
- Auckland: Reported flat QoQ performance and a slight 0.9% YoY decline, reflecting broader challenges.
- Wellington: An 8% QoQ recovery partially offset a YoY decline of 1.5%, highlighting momentum in recovery efforts.
- Smaller Regions: Areas like Marlborough and Nelson experienced notable declines, emphasising the challenges faced by smaller markets.
The report states that 57% of surveyed Restaurant Association members reported worse or significantly worse profitability compared to the same period last year. The downturn in customer numbers continues to be the biggest challenge, with 38% of respondents identifying it as their primary concern.
Operational Pressures
Rising input costs continued to strain businesses, with a 1.2% annual increase in food prices to September 2024. Specific items, like olive oil, surged by 25%, maintaining pricing pressures. Whilst food prices have eased in Q$4, operators have responded by streamlining operations, renegotiating supplier contracts, and improving efficiencies to protect profitability.
Resilience and Optimism
Despite challenges, resilience remains a hallmark of the industry. Encouragingly, 42% of businesses reported profitability equal to or better than the same period last year. With stabilizing economic indicators, many operators are cautiously optimistic about harnessing seasonal demand in Q4 to position for a stronger 2025.
Restaurant Association Chief Executive Marisa Bidois commented:- “The hospitality sector continues to demonstrate incredible adaptability and determination, leveraging creativity and connection to weather ongoing pressures. We remain optimistic that as economic conditions stabilize, 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.
