NZ hospitality industry bounces back after two slow years

December 5, 2022

Sales for the hospitality industry have bounced back after two years of subdued trading, according to a new report from the Restaurant Association of New Zealand.

This year, the sector hit record sales of more than $13.38 billion (year ending September 2022), an increase of 7.7% on the previous year.

Last year, the industry saw revenues bounce back in the early half of the year, but it declined in the third and fourth quarters.

This year's revenue is a 10.75% increase on pre-Covid revenue.

The third quarter of this year saw the biggest gains, with revenues up 38% on the same period last year.

Sale increases carried across the industry, apart from clubs which saw a 4.6% decrease.

All other sectors showed sale growth for the year, with the takeaway sector having the largest revenue growth, recording sales of $517 million more than 2021, followed by the pubs, taverns and bars sector with a sales increase of $375 million and cafes and restaurants with $358 million.

A bar (file image).

Cafes and restaurants have returned to pre-Covid sales levels, which saw annual sales of $6.6 billion for the year ending September 2022, more than 15% higher than 2019.

Over half of every dollar spent eating out is spent at a restaurant or café, which holds 50% of the market share.

The report showed spending is highest in Auckland, Wellington, Canterbury and Waikato. All four regions all have annual sales of more than $1 billion.

In 2022 the Queenstown-Lakes region had the largest percentage sales growth at 13.2%, followed by Taranaki at 9.7% growth and Auckland where sales grew sales by 9.5%.

Only three regions had sales declines from 2021-2022. Kaikoura, recorded a 9.4% decline, Southland a 1.7% decline and Tasman 0.6%.

Despite some Covid disruptions in Auckland in the second half of 2021 and early 2022, sales were $442 million more than 2021, showing percentage sales growth of 9.5%.

Auckland has bounced back to achieving new sales highs, with a 10.6% increase on pre-Covid peaks.

The report also said skill shortages continue to impact the industry.

While 2022 employee numbers reversed the decline seen in 2021 to reach 135,000 employees, the 0.37% growth is the lowest gain in over a decade.

Employee growth is driven by the takeaway sector, with an increase of 4.8% over the past year.

The report said to rebuild itself, the industry should focus on recovery and sustainability.

“Until the pandemic hit, the hospitality industry contributed $12 billion to the economy, making it one of New Zealand’s largest industries. Forecasting has shown that without Covid interruptions, the industry would likely have been posting annual revenues of $14 billion."

“The industry is predicted to need another 30,000 employees to keep up with the pace of growth over the summer period," the Restaurant Association said.