A Year of Two Halves

Nationwide sales for the hospitality industry reached an all-time high of $12.1 billion year ending March 2020, before plummeting, posting just $1.7 billion for the period April – June 2020, a decline of more than 40 percent, according to the latest Restaurant Association Hospitality Report.

In 2019 New Zealand’s hospitality sector achieved record sales of over $11.7 billion increasing to $12.1 billion for the year ending March 2020. This represents sales growth of 3.3 percent over the previous year, which follows three years of significant growth (4.2 percent from 2018-2019, 3.6 per cent from 2017-2018 and 9.7 per cent from 2016-2017).

Sales growth carried across the industry, with restaurants and cafes recording the highest sales increase in dollar terms. Over half of every dollar spent dining out is spent at a restaurant or café, which has more than 51 per cent market share. Annual sales for this dominant sector grew four percent year-end 2020, which in dollar terms translates to an increase over the year previous of $236 million.

Takeaway and food-to-go also realised annual sales growth of 4.1 percent, the highest for the sector, while catering services also saw a 4.0 percent increase, posting sales of $956.8 million.

Sales in 2020, after March, do not paint such an optimistic picture as under Level 4 lockdown, sales revenue for the industry plummeted, posting just $1.7 billion for the period April to June 2020, a decline of more than 40 per cent compared to the same period last year.

Trading conditions improved overall in the third quarter of 2020, however, whilst the industry overall had a 3.1 percent decline in sales over the same quarter in 2019, many regions recorded very positive sales growth, including Tasman (up 29.3 percent over 2019), Kaikōura (19.4 per cent), Marlborough (18.2 percent) and Northland (17.8 percent).

“It’s still very much a mixed bag out there,” said Marisa Bidois CEO of the Restaurant Association.

“Whilst some businesses are recovering well, many others are still experiencing significant losses. Establishments in tourist hotspots, as well as Auckland CBD, are still down on last year with the trend of city centre workers staying home and loss of tourist dollars continuing to cause significant reductions in trade.”

The industry was overall still in decline in the third quarter of 2020, compared to the same quarter in 2019. Takeaways, however, recorded a positive 8.4 percent sales growth over this period – the only sector to record a positive change.

For all regions, it will still take some time to recover from the declines experienced from April – June, with Auckland and Queenstown continuing to be the two most affected regions.

“The road ahead may be a bumpy one but there are also opportunities and with careful planning, operators can make it through while building a strong and sustainable business. Operators identify New Zealanders supporting local businesses and building deeper relationships with customers and our communities as two of the most significant opportunities for their businesses over the next 12 months,” said Restaurant Association CEO Marisa Bidois.

Members of the Restaurant Association can download the full report for free from the Restaurant Association website.