Hospitality has endured another unpredictable year, but has continued to hold its ground despite operating under challenging conditions.
The Restaurant Association of New Zealand’s 2025 Hospitality Report has presented a sector that has reached a significant milestone while operating under sustained strain. Annual hospitality sales reached a record NZD 15.99 billion in the year to June 2025, representing growth of 1.4 percent. On the surface, this suggests resilience. In practice, that growth sits well below food price inflation of 4.8 percent and overall inflation of 2.7 percent, reinforcing what operators have been saying consistently: sales are rising, but profitability remains under pressure.
The strongest growth came from takeaway food services, which delivered 3.2 percent growth and added NZD 137.6 million in value. Catering also showed signs of recovery, particularly in quarterly results, reflecting the return of events and functions after several disrupted years. By contrast, cafés and restaurants, still the backbone of the industry with NZD 7.8 billion in annual sales, recorded just 0.3 percent growth. This highlights the narrow margin operators are navigating between rising costs and consumer resistance to further price increases.
Regional performance continues to reflect a two-speed economy. Tourism-linked regions outperformed, with Nelson recording 15.1 percent annual sales growth, Queenstown-Lakes 14.2 percent, and Kaikōura 10.2 percent. These results contrast sharply with declines in Gisborne, Manawatū-Whanganui, Marlborough, Hawke’s Bay and Canterbury. Auckland, which accounts for nearly 40 percent of total hospitality turnover, grew just 1.2 percent, with city centre venues continuing to feel the impact of lower office occupancy and reduced weekday foot traffic.
Outlet numbers increased by 2.3 percent to 20,040 nationwide, an improvement on the previous year. However, this masks high churn. Closures and liquidations rose over the period, indicating that growth reflects ongoing turnover rather than renewed confidence. Takeaway outlets led expansion, reinforcing the shift toward convenience and value-led formats, while café and restaurant growth remained subdued, and clubs continued to contract.
Employment growth slowed markedly. The industry now employs 146,300 people, up just 0.7 percent year on year. While acute staff shortages have eased, skilled kitchen and senior front-of-house roles remain difficult to fill. Labour costs have reached an average of 40 percent of revenue, a critical threshold in an industry where food costs already consume a further 28 to 35 percent. Productivity varies widely by sector, with takeaways significantly outperforming full-service dining, underscoring the structural challenges facing restaurants.
The report makes clear that many of the changes shaping hospitality are not temporary. Consumers are spending more selectively, favouring neighbourhood venues, value-driven offers, and fewer but more considered occasions. Operators responding best are those investing in training, simplifying operations, adopting technology, and staying closely connected to their customers.
Looking ahead, easing monetary policy and continued tourism recovery offer cautious optimism. However, the report is unequivocal that growth alone will not restore margins. The next phase for hospitality is not about expansion for its own sake, but about building operational resilience in a tougher, more disciplined trading environment.
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