Restaurants nationwide find themselves on the brink, their financial reserves depleted in the aftermath of the COVID-19 pandemic and a soaring cost of living crisis that has wreaked havoc on the industry.
The hospitality sector is in disarray, as numerous restaurant proprietors report a significant decline in patronage, severely denting their profits and compelling some to shutter their establishments.
One business owner feeling the acute financial pressure is Chand Sahrawat, who oversees Cassia, KOL, and French Café. She revealed that the COVID-19 pandemic wiped out hundreds of thousands of dollars in savings, leaving them with no cushion for the current challenges. Sahrawat explained, “We’ve drained nearly $600,000 in savings during COVID. We are now looking at topping that up through our mortgages, but there’s a limit to how far we can stretch that.”
This situation has unfolded as customer numbers rapidly dwindle, with New Zealanders tightening their belts to cope with rising mortgage and living expenses. Sahrawat empathized with their predicament, stating, “We are down by about 50 percent in terms of customer footfall, but we don’t blame the customers. Everyone’s dealing with high mortgages, struggling to make ends meet, and when you’re worried about keeping a roof over your head, dining out becomes a luxury.”
She went on to emphasize the precarious financial state of many businesses, noting, “Our savings have vanished, and there’s not much left to fall back on. We genuinely hope those who can afford it will come out and support the hospitality industry.”
Sahrawat expressed concerns that if the upcoming holiday season does not meet expectations, numerous businesses could face closure. She urged those with the means to do so to dine out when they desire a treat, suggesting, “There are behavioral changes to be made. Some evenings, you might want to order UberEATS and stay at home, which became a habit during COVID. With more people working from home, it’s easy to forget those Friday drinks with friends. Making a conscious effort to go out and socialize instead of ordering takeout can make a difference.”
Sahrawat’s concerns are not isolated. The Restaurant Association stated that its members are grappling with a decline in customers and escalating food and labor costs. CEO Marisa Bidois explained that the industry heavily relies on discretionary spending, making it vulnerable when people tighten their belts. A recent survey of members revealed that 35 percent of respondents found “managing the customer downturn” to be the most pressing issue.
Bidois further highlighted the challenges facing the industry, including concerns about managing labor and food costs, staff shortages, and fixed operating expenses. Business confidence has also taken a hit, with 43 percent of respondents believing that conditions will remain unchanged in the next year, while 30 percent anticipate a worsening situation. Only 27 percent maintain optimism for improvements in the coming year.
Bidois emphasized the industry’s resilience and adaptability, as businesses craft enticing specials and unique dining events to attract and retain customers. While some hope for a revival in the Christmas and Summer trading season, the immediate challenges faced by many establishments are undeniable, with uncertainty prevailing in the face of turbulent economic waters.