Speaker 1: Kielda.
Speaker 2: I'm Chelsea Daniels and this is the Front Page, a
Speaker 2: daily podcast presented by the New Zealand Herald. It's tough
Speaker 2: out there for New Zealand's hospitality industry. The rising cost
Speaker 2: of living in the past few years has seen everyone
Speaker 2: tightening their belts, and the skyrocketing cost of food in
Speaker 2: particular has been cutting into people's disposable income, with overheads
Speaker 2: increasing at the same time as patrons are cutting back
Speaker 2: on their spending. It's no wonder we've seen a series
Speaker 2: of beloved bars and restaurants closing their doors for good.
Speaker 2: So what's next for the industry and how can these
Speaker 2: businesses adapt to changing times. Today on the Front Page,
Speaker 2: we're joined by Herald Deputy Lifestyle Editor Johanna Thornton and
Speaker 2: aut Hospitality and Tourism professor David Williamson to talk about
Speaker 2: the state of the sector and where.
Speaker 3: It needs to go from here.
Speaker 2: Johanna, can you run us through some of the restaurants
Speaker 2: that have closed down so far this year?
Speaker 3: Unfortunately there might be a few, too many to name.
Speaker 4: Yeah, there's a few. I mean, I suppose the biggest
Speaker 4: or the most shocking was Espequre, which closed in July
Speaker 4: after thirty two years. We had Madame George on Kodunghappy Road,
Speaker 4: which was a huge loss. It's one of weba's top
Speaker 4: fifty restaurants last year. There was also Floor on k
Speaker 4: Road as well, which is a cute little wine bar.
Speaker 4: Homeland is closed down. Orphan's Kitchen Omni which is a
Speaker 4: little yakatory spot on Dominion Road. Stanley of Winebar and Milford.
Speaker 4: We also had Conch which was more sort of a
Speaker 4: bar and restaurant, the Wine Cellar and Tiger Burger is
Speaker 4: another one that's closed.
Speaker 3: God, there's so many. What have some of the reasons
Speaker 3: been behind their closures?
Speaker 4: There's a few and Madame George said it was the
Speaker 4: economic downturn. Danleyev said that there were a host of
Speaker 4: reasons like the pandemic with events and strained economic conditions,
Speaker 4: and I actually saw the Restaurant Association reported in a
Speaker 4: recent survey that the main challenges businesses are citing is
Speaker 4: just customer downturn.
Speaker 2: David, from your years of experience in the hospitality industry,
Speaker 2: is this spate of closures unusual or is it kind
Speaker 2: of par for the course.
Speaker 5: It's sort of hard to differentiate that it is an
Speaker 5: unusual time.
Speaker 6: I'm not sure that number.
Speaker 5: Of closures is particularly different, but I think what is
Speaker 5: different is that people are really struggling in this sector,
Speaker 5: and I think we're going to see more closures coming through.
Speaker 5: I was talking to a couple of veterans from the
Speaker 5: industry recently and they were adding to that suggestion of
Speaker 5: what's really going on is not just the difficulties right now,
Speaker 5: but the history of really impactful changes over the last
Speaker 5: sort of period since COVID. So you have to understand
Speaker 5: that this industry, you know, was shut down or massively
Speaker 5: disrupted for a number of years through COVID, when the
Speaker 5: boarders shut they had huge staff shortages. Then you have
Speaker 5: those weather events. Just as we're coming out of COVID
Speaker 5: and starting to recover from that, we get smashed with
Speaker 5: weather events, which was really impactful on the industry. And
Speaker 5: then you have, yeah, the high inflation, cost of living.
Speaker 5: People have a lot less discretionary income to spend on
Speaker 5: things like restaurants, cost of goods. For these industries that
Speaker 5: record highs, they are paying top interest rates on any
Speaker 5: debt they're holding.
Speaker 6: There's perceptions of higher crime in.
Speaker 5: The inner city for people in Auckland who are coming
Speaker 5: in to dine out at night. So you know, there's
Speaker 5: an awful lot going on and it's just been one
Speaker 5: challenge after another. So a lot of these businesses are small, standalone,
Speaker 5: own or operated businesses. They don't have huge amounts of
Speaker 5: capital reserves to survive periods like this. So it's not
Speaker 5: so much a question I think of, gosh, why are
Speaker 5: staurants going down? At the moment, it's a question of
Speaker 5: how on earth are they not going down given you know,
Speaker 5: the conditions that we've had over the past few years.
Speaker 1: For decades, Aucklanders have enjoyed a long lunch in the
Speaker 1: sun at Ponsomby Institution SPQR.
Speaker 7: But now the.
Speaker 1: Doors are shout and that's a liquidation, owing creditors over
Speaker 1: two million dollars, yet another casualty of rising costs and
Speaker 1: people keeping their wallets firmly shut.
Speaker 2: Johanna, can you explain to us what happened with SPQR
Speaker 2: in particular?
Speaker 4: Yeah, well, I mean, I suppose the announcement seemed pretty
Speaker 4: dramatic when they said they were closing in July, but
Speaker 4: I think it had definitely, you know, the quality of
Speaker 4: the food maybe had dropped off in recent years and
Speaker 4: it wasn't sort of the hottest spot to be anymore
Speaker 4: where it had been in the past, and owner Chris
Speaker 4: Rupe just released a really brief statement saying that he
Speaker 4: was really sorry for the current situation and sort of
Speaker 4: encourage people to get out there and support hospitality. It
Speaker 4: turned out they were placed into liquidation with the business
Speaker 4: owing more than two million in land revenue and it
Speaker 4: owes over one hundred thousand two staff in unpaid wages
Speaker 4: and holiday pay. And then The Herald also reported that
Speaker 4: the business that Ownsespecure withdrew nearly one point four million
Speaker 4: from the business before it went into liquidation. So I
Speaker 4: think we're going to hear a lot more about that story.
Speaker 3: It is quite jarring when some of our favorite places close.
Speaker 2: Hey, I mean Peter Gordon's Homeland closed this year's citing
Speaker 2: issues with renewing its lease. How often is an issue
Speaker 2: like that to blame for a space taking on a
Speaker 2: new life.
Speaker 4: Well, I mean I heard that the problem with Homeland
Speaker 4: was there's a massive new retirement village going in there
Speaker 4: called Cracker Bay. So I think the development of that
Speaker 4: whole West Haven area didn't include keeping homeland there, So
Speaker 4: I'm not sure how often you know a lease is
Speaker 4: to blame.
Speaker 5: Yeah, I think there's a whole range of problems like
Speaker 5: that that certainly would finish off a lot of places.
Speaker 5: But yeah, again, I think it's a more complet and
Speaker 5: a multifaceted number of pressures which brings these organizations to
Speaker 5: the edge of collapse. I think what is interesting is
Speaker 5: it's such a resilient and it's such an innovative industry.
Speaker 5: I often describe restaurants that's extremely nimble, and so you know,
Speaker 5: at the moment where you have these raally difficult trading conditions,
Speaker 5: hospitality shows up as an area where businesses do suffer
Speaker 5: and go down, but when conditions pick up, hospitality is
Speaker 5: also the first industry to recover. We sort of go
Speaker 5: into recessionary times quicker and lower, but we've come out
Speaker 5: of them faster and higher. So it's a very nimble industry.
Speaker 5: And Ram's just pointed out in their last report that
Speaker 5: you know, there is nineteen thousand, five hundred and eighteen
Speaker 5: restaurants still in New Zealand. It's the largest number we've
Speaker 5: ever had in the country. The growth has very flat
Speaker 5: since twenty twenty three, only zero point one percent growth
Speaker 5: and restaurant numbers. But you know, it's not an existential crisis.
Speaker 5: We're not going to certainly run out of restaurants, but
Speaker 5: it is a very real crisis for the people who
Speaker 5: are running these businesses. And there is a risk that,
Speaker 5: you know, if we don't get out and support these
Speaker 5: businesses and think about how we can address the pressures
Speaker 5: that they're facing, that we could lose some more really
Speaker 5: good operators. And it is a loss, it's a social loss.
Speaker 5: We love these places to go out and enjoy the product.
Speaker 5: We have some of the best restaurants in the world.
Speaker 5: You know, we just got eight of our restaurants, including
Speaker 5: the top thousand restaurants in the world by least last
Speaker 5: year in twenty twenty three. We have some of the
Speaker 5: best food, some of the best wine, world class restaurants,
Speaker 5: great places to go, and we just need to be
Speaker 5: careful that, yeah, we don't let these economic conditions damage
Speaker 5: this industry to the point that it could really cost
Speaker 5: us both in terms of tourism and our social enjoyment.
Speaker 8: The Restaurants Associations report into the state of the set
Speaker 8: does show sales are up a five point eight percent
Speaker 8: to nearly sixteen billion dollars. The number of outlet's across
Speaker 8: the country only rose by zero point one percent. That's
Speaker 8: just an extra twenty seven nationwide.
Speaker 5: Definitely going out less, they probably won't splurgs in the
Speaker 5: same wine, or you know, they won't have that extra cocktail.
Speaker 8: Pretty Much every single cost that we would have has
Speaker 8: gone up over the last few years. So whether it's rent,
Speaker 8: whether it's staff, whether it's food, every part of the
Speaker 8: cafe business has gone up. We need to raise I'll
Speaker 8: turn over by about fifty percent.
Speaker 2: We mentioned some of the numbers of restaurants there, David,
Speaker 2: is there perhaps an issue also with us having more
Speaker 2: restaurants than our population can sustain?
Speaker 3: Perhaps, and some of these closures.
Speaker 2: Are just a course correction to a more sustainable hospitality environment.
Speaker 5: There is an argument that I've made around that, saying, yeah,
Speaker 5: that perhaps we don't need I always use the example
Speaker 5: of I walk up High Street and Lawn Street to
Speaker 5: the university here, and I counted one time thirty food
Speaker 5: outlets on those two streets, and I was going, you know,
Speaker 5: if that was halved, would that be a social problem. Obviously,
Speaker 5: it's a problem for the people who run these businesses
Speaker 5: without a doubt, but it could be a correction. We
Speaker 5: could be oversupplied. One of the veteran restauranteurs I was
Speaker 5: talking to recently had just come back from overseas, and
Speaker 5: I myself was lucky enough to get overseas, and we
Speaker 5: were both commenting on the fact that, you know, New York, Milan, London,
Speaker 5: some of these cities that we're lucky enough to visit
Speaker 5: have these huge populations and fantastic infrastructure to support a.
Speaker 6: Really vibrant industry sector.
Speaker 5: And yeah, perhaps in New Zealand we've got too many
Speaker 5: restaurants and not enough people. But I think more importantly,
Speaker 5: we're basically constructed an economy which is proving very difficult
Speaker 5: to support things like hospitality, things like retail, things like
Speaker 5: our arts sector. If people don't have money, you know,
Speaker 5: we've got a real cost of living crisis, and people
Speaker 5: don't feel like they've got money in their back pocket
Speaker 5: to spend, it's very difficult to maintain a vibrant hospitality
Speaker 5: and arts and retail scene. So we need some guidance
Speaker 5: from I think political areas as well to try and
Speaker 5: build an economy that will support these types of industries.
Speaker 3: There's also the going out culture as well.
Speaker 2: Hey, Johannah, do you think COVID and all these lockdowns
Speaker 2: have really changed the way we go out?
Speaker 4: Well, I mean, for me, it's made me go out more.
Speaker 4: You know, I really want to get out there and
Speaker 4: support restaurants, and I really missed not being able to
Speaker 4: dine out when we couldn't. But I do think that
Speaker 4: for a lot of people, they're reserving dining out for
Speaker 4: special occasions, which is fair enough. And we get a
Speaker 4: lot of feedback at Viva Magazine that, you know, people
Speaker 4: really want to know that something's great before they'll go
Speaker 4: out and take a risk. And I think that's where
Speaker 4: sort of our restaurant reviews really come into play there,
Speaker 4: because people can kind of know that they're going to
Speaker 4: have a fantastic time if they're dropping a lot of
Speaker 4: money on a dinner out.
Speaker 2: I'm always checking those reviews, by the way before I
Speaker 2: go out, So I'm definitely one of those people. It's
Speaker 2: not all bad news.
Speaker 3: Is it.
Speaker 2: You've recently, Johannah done a story on some of the
Speaker 2: restaurants that have actually opened this year.
Speaker 4: Well, that's the thing. I mean, I'm actually blown away
Speaker 4: by how many new restaurants open every year and just
Speaker 4: this year there were twenty on my list. So we
Speaker 4: had San Ray on Pontsby Road, which is from the
Speaker 4: team that brought us Kasidor Restaurant. We've got Bodega Delian Bistro,
Speaker 4: which is also on Pontsby Road. There's a new amazing
Speaker 4: little French wine bar in Birkenhead called on Pinard. Maybe
Speaker 4: the most ambitious new opening of the year is Queen's Rooftop,
Speaker 4: which is this amazing rooftop bar on top of one
Speaker 4: Queen Street. And also in that building is Advia restaurant
Speaker 4: from chef Gareth Stewart, which opened in January. There's more.
Speaker 4: There's First Mates, Last Laugh, which is due to the
Speaker 4: Tabron's new glamorous spot in West Haven opening this week
Speaker 4: at the Marriott Hotel. But I think a lot of
Speaker 4: things that these places have in common is that they're
Speaker 4: actually from restaurant tours who maybe already have a restaurant
Speaker 4: or they've got the backing of a hotel, so there's
Speaker 4: a bit more of the knowledge and sort of money
Speaker 4: behind them, which is quite an interesting trend I'm seeing.
Speaker 2: What do you think hospitality needs to adapt and survive
Speaker 2: or is it fine as it is?
Speaker 6: David No, I think yeah.
Speaker 5: From a lot of the conversations I've had with practitioners,
Speaker 5: there's this real feeling that these conditions are driving a
Speaker 5: need for innovation and fundamental change in the way that
Speaker 5: hospitality businesses run. I think you made a great point
Speaker 5: there about the upper end. There are always new restaurants
Speaker 5: coming in and the upper end of the markets doing
Speaker 5: quite well still people going out for special occasions, but
Speaker 5: that kind of middle area every day dining out thinking oh, yeah,
Speaker 5: I don't want to cook tonight, so I think I
Speaker 5: might just go out and have something to eat. That's
Speaker 5: where it's really struggling. And there's been some made changes
Speaker 5: around your people drink. Working from home has affected to
Speaker 5: lunch trade, transport issues. So I think in order to
Speaker 5: be really successful in this type of environment in the future,
Speaker 5: there may be a fundamental need to move more towards
Speaker 5: that casual, reasonably priced, fast turnover dining where perhaps you
Speaker 5: are getting people to come through your place and do
Speaker 5: three or four sittings in a night, moving those tables,
Speaker 5: turning those tables over to really maximize how you're going
Speaker 5: to get your revenue through the door, while the upper
Speaker 5: end can do the formal three hour meal, high cost,
Speaker 5: great reviews, really expensive thing. Well, that middle range I
Speaker 5: think really has to think about moving into that space.
Speaker 6: When I was in Milan, that everyday's space.
Speaker 5: People living in apartments there eat out all the time,
Speaker 5: and they will go and.
Speaker 6: Have a casual meal it's reasonably priced.
Speaker 5: And then leave within an hour, and then next person
Speaker 5: will come in and move on to that table, and
Speaker 5: so wondering whether that will be something that needs to
Speaker 5: be really explored.
Speaker 6: But I think people are.
Speaker 5: Going to have to have really sharp skills in terms
Speaker 5: of pricing and keeping an eye on costs. It's not
Speaker 5: only that costs are going up dramatically, but also they're
Speaker 5: really variable, and so if you don't have a razor
Speaker 5: sharp eye on adjusting your menu pricing as costs move around,
Speaker 5: you can get wiped out really quickly. I think people
Speaker 5: are going to have to be innovative about how they
Speaker 5: think about alcohol sales. Those have gone down a lot.
Speaker 5: People aren't drinking as much as they used to, So
Speaker 5: how do you innovate around that? You know, and as
Speaker 5: Danny Mayro I said that the curse of restaurants is
Speaker 5: it's not one big thing, it's a thousand little things.
Speaker 5: It's like a eight sided Rubik's cube. You're constantly moving
Speaker 5: and trying to adapt to the market and the changes
Speaker 5: going on, and it's very, very tricky. So I have
Speaker 5: absolute faith that the industry is going to innovate, survive,
Speaker 5: and come through really well. Of places go out, new
Speaker 5: places come in. And I guess one really exciting thing
Speaker 5: is that you employment's up seven point three percent in
Speaker 5: the sectors, so those really brutal.
Speaker 6: Staff shortages are starting to.
Speaker 5: Weaken and we're seeing our whole new generation coming in
Speaker 5: to fill those roles, and that will really help with
Speaker 5: consistency and getting on in the future.
Speaker 7: The top challenge currently for our businesses is customer downturn,
Speaker 7: so that sort of a start contrast with last year
Speaker 7: it was rising costs. A recent survey from our members
Speaker 7: around how they're faring in twenty twenty four told us
Speaker 7: that around seventy eight percent of them are worse off
Speaker 7: this year than they were last year, when in twenty
Speaker 7: five things will start to get better. Well, that's another.
Speaker 3: Question, Jehannah, what do you think needs to happen?
Speaker 4: Well, I mean I think that restaurants already are trying
Speaker 4: really hard to adapt. I mean many of them do
Speaker 4: sort of pop ups, labs events, you know, they do
Speaker 4: special menus or set menus. I'm noticing a lot of
Speaker 4: restaurants opening for lunch on the weekend. You know, they're
Speaker 4: really trying to provide something new for their diners, or
Speaker 4: they're totally changing their business model, like for example, Sid
Speaker 4: Satowat earlier this year announced that he was scaling back
Speaker 4: the fine dining restaurants Sit at the French Cafe and
Speaker 4: turning it into a Nie, which is more of a
Speaker 4: modern Pan Asian restaurant where you can drop in for
Speaker 4: a you know, an entrain, a cocktail or have a
Speaker 4: big meal, and then turning Sit at the French Cafe
Speaker 4: into a smaller restaurant and reverting it back to the
Speaker 4: French Cafe. So people are trying to adapt and try
Speaker 4: new things to see what will work. So I think
Speaker 4: we just got to watch the space really and.
Speaker 3: There's real rise. Actually I'll end on this on social media. Hey,
Speaker 3: I'm on TikTok.
Speaker 2: I spend way too much time on tech talk, and
Speaker 2: I know I'm probably too old to be spending.
Speaker 3: So much time on TikTok.
Speaker 2: But I get so many good restaurant recommendations from people
Speaker 2: on tech talk, and I've noticed around the corner from
Speaker 2: my house there's a cafe and I was wondering why
Speaker 2: there were lines outside every Saturday and Sunday, and it's
Speaker 2: because it was on TikTok. David, do you think that
Speaker 2: that's really something quite fun and exciting for the industry?
Speaker 6: Absolutely?
Speaker 5: Yeah. I mean, you know, word of mouth has always
Speaker 5: been the absolute driver of great success in restaurants, and
Speaker 5: the technology that shares that word of mouth will change
Speaker 5: and has changed, but that's really how it's always worked,
Speaker 5: and now it will always work. People sending out the
Speaker 5: word that this place is great, you need to go
Speaker 5: and check it out. And yeah, I mean there's a
Speaker 5: number of places as I walk up the town where
Speaker 5: you see lines. New Zealanders aren't renowned for lining up
Speaker 5: for things, but when you get it right and their
Speaker 5: high quality and their priced right, and they have that
Speaker 5: buzz around them, it's really exciting to see that people
Speaker 5: are willing to line up and wait.
Speaker 6: To get the product. It's super exciting.
Speaker 3: Is that something you've noticed as well, Johannah.
Speaker 4: Yeah, I mean Instagram is definitely a go to for meat,
Speaker 4: for finding out new places to eat and drink, and
Speaker 4: I think it really fills that gap where, you know,
Speaker 4: some of these bigger restaurants are the ones maybe get
Speaker 4: written about in magazines or online, but you know, the
Speaker 4: little cafe or the little hole in the wall or
Speaker 4: the little noodle shop. I think Instagram or TikTok, like
Speaker 4: you say, is a really great place to shine a
Speaker 4: light on those guys.
Speaker 3: Thanks for joining us, guys. That's it for this episode
Speaker 3: of the Front Page.
Speaker 2: You can read more about today's stories and extensive news
Speaker 2: coverage at enzed Herald dot co dot nz.
Speaker 3: The Front Page is produced.
Speaker 2: By Ethan Siles with sound engineer Patty Fox.
Speaker 3: I'm Chelsea Daniels.
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