NEW ZEALAND | Hospitality has always been a tough business, but right now it feels tougher than ever. For many restaurateurs, café operators and catering companies, the pressure is relentless: costs are high, demand is soft, and the numbers tell a grim story.
In the first half of this year alone, nearly 1,300 New Zealand businesses have gone into liquidation, a 12 percent rise on last year. At this pace, we are set to surpass 2024’s record of 2,500 closures. These are not just fringe players. Auckland has farewelled icons like Dragonboat Restaurant after 31 years. Longstanding, well-known businesses are running out of steam.
Auckland is taking the hardest hit. In just one quarter last year, the city recorded 383 liquidations, compared to only 56 in Wellington, and at almost double the rate of other regions. The scars are visible: empty shops in the CBD and suburbs alike, a daily reminder of an economy struggling to find its way. Beyond the city, the rural story looks different. Farmers may see a short-term lift from the sale of Fonterra consumer brands, but much of that windfall is likely to go straight back into repaying debt caused by relentless weather challenges. Relief may come, but it will be swallowed quickly.
For hospitality and other small businesses in Auckland, working capital is their oxygen. Wages, suppliers, insurance, rent and the ability to adapt all depend on liquidity. Yet banks remain more comfortable lending against residential houses than supporting small firms. Access to credit is scarce.
It may be time to revisit a lifeline that worked during COVID-19: the Small Business Cashflow Loan Scheme. Delivered through Inland Revenue, it helped many businesses survive. A targeted restart loan, limited to firms that repaid the previous loan, would be low-cost and fast to roll out, with the infrastructure already in place.
But more broadly, government needs to stop tweaking around the edges and actually make a decision that will make a difference. The tail on this recession is not only long, it has a sting in it. We are staring at a reality where growth is flat, yet costs of doing business keep rising. That is the very definition of stagflation, and small businesses are bearing the brunt. Confidence is fragile, and without decisive intervention, closures will keep mounting.
This would not be a bailout. It would be a bridge. A way to keep businesses afloat, protect jobs, and restore some confidence to an economy that badly needs it. For Auckland’s hospitality sector in particular, the question is not whether we can afford to help small business, but whether we can afford not to. SMBs are the glue to the economy – and they are falling apart.
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