Hospitality Annual Revenue Bounces Back

The latest Restaurant Association Hospitality Report finds that nationwide sales for the hospitality industry have bounced back after two years of subdued trading.

In 2022 New Zealand’s hospitality sector achieved record sales of over $13.38 billion (year ending September 2022). This represents a sales increase of 7.7 percent over the previous year.

2021 was a challenging year for hospitality where we saw revenues bounce back in the early half of the year, before declining in the third and fourth quarters, so this year’s revenue gains represent a recovery – a net 10.75 percent increase on pre-pandemic revenue.

Third quarter 2022 saw the biggest Y-O-Y gains with revenues up 38 percent on previous the same period in 2021.

Sales increases carried across the industry, excluding the clubs sector, which recorded a decrease of 4.6 percent.

All other industry sectors presented sales growth for the year, with the food to go / takeaway sector having the largest revenue figure 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 Cafes and restaurants have returned to pre-Covid sales levels, which saw the sector record annual sales of $6.6 billion for the year ended September 2022, more than 15 percent higher than 2019.

Over half of every dollar spent dining out is spent at a restaurant or café, which continues to hold 50 percent market share.

Breakdown by Region

Consumer spending is highest in Auckland, Wellington, Canterbury, and Waikato. These four regions all have annual sales of more than $1 billion per annum.

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

Only three regions had sales declines from 2021-2022 - Kaikoura, which recorded -9.4 percent sales decline, Southland with 1.7 percent and the Tasman with 0.6 percent.

Despite some major ongoing Covid-related upheavals for the Auckland region in the second half of 2021 and early 2022, this region posted sales of $442 million more than 2021 (year ended September), showing percentage sales growth of 9.5 percent. Auckland has bounced back to achieving new sales highs, recording 10.6 percent higher than pre-Covid sales peaks.

Labour Shortages

Skills shortages continued to plague the industry. While 2022 employee numbers reversed the decline seen in 2021 to reach 135 thousand employees, at 0.37 percent this is the lowest growth level in more than 10 years.

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

The dominant Restaurant and Cafe sector had a minimal 0.66 percent increase in employee numbers from 2021-2022, and three sectors had declines; caterers (down 6.12 percent); pubs, taverns and bars (-4.5 percent) and clubs (-4.9 percent).

The Road Ahead

The rate of growth in hospitality over recent years has been impressive and until the covid-19 outbreak the industry was booming.

Before the COVID interruption the industry was on track to deliver sales of more than $14 billion by 2022.

Labour shortages and increased food costs are putting significant pressure on businesses.

To rebuild itself the industry needs to focus on recovery and sustainability and put in place operational structures for a profitable and sustainable hospitality business model.

“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.

“It’s no secret that the largest challenge our industry currently faces is in meeting our workforce demands.

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

“While the Association has placed additional focus on the training and development of New Zealanders, with only 3.3 per cent unemployment, it is essential that we can access the talent we need to run our businesses, and in many cases help grow the industry as a whole.”