Unpopular Opinion: Capping Licences Could Save Your Business

The COVID-19 pandemic has brought the discussion of licence caps front and centre of the Auckland hospitality industry. While the elephant in the room is the idea of purists who believe licence caps go against free trade and market forces, capping restaurant licences could be a good thing.

By capping licences, the licence itself becomes an asset, something that the holder could then sell on. It would also mean that not every man and their dog can get one, so this would reduce oversupply and surely increase the competency and quality of outlets.  If there was a cap by region, that would also spread business around the country, which could help regions get back into business, especially in COVID-19 times.

Hospitality New Zealand spokesman Jeremy Smith told The AM Show the cap issue is worth a conversation.

"It's something we've debated quite a bit," he said.

Everyone is affected by the COVID-19 lockdowns, and now the tide is out, we are finding those that have been swimming naked. For better or worse, a lot of new operators tend to open with little or no data about what businesses are doing in the area, where the foot traffic is or how consumers are choosing to experience either dine-in or takeaway.  This creates an unsustainable lack of profit for existing business and for newcomers, particularly when discounting or vouchers are used as a marketing campaign.

Auckland is overshopped across a number of retail categories, with fewer new restaurants, consumers can focus on the joys of what we already have.

Will this create a divide between boomer operators and Gen Z entrepreneurs?

If the authorities will be picking and choosing who gets the new licences, an open conversation is needed over creating an unbiased system that is transparent and open to challenge.

With the wage subsidy ending, Auckland sitting in a further lockdown period, and the rest of the country in Level 1, our industry needs not just support but action.

Despite this, Prime Minister Jacinda Ardern said New Zealand took a different approach to other countries, one that she believes was the best option, tough on business but prioritising health. Ardern added that she believed that New Zealand businesses have found ways to make it work.

Has it worked, or is this second wave the straw that will break the camel’s back?

Tell us your thoughts here!

Capping Licences