Marisa Bidois: Restaurant Association CEO on the hospitality sector's record high revenue but low profit margins

Revenue in the hospitality sector's reached a new record high, but many operators are seeing profit margins reach a new record low. 

Restaurant Association data shows sales have risen 1.4% in the past year. 

Tourism regions like Nelson and Queenstown-Lakes are seeing strong growth but central Auckland and Wellington are still doing it tough. 

Association Chief Executive Marisa Bidois told Mike Hosking tourism is continuing to drive much of the growth. 

She says CBDs are struggling, as foot traffic hasn't got back to pre-Covid levels yet. 

Bidois says any rise in revenue is being eroded by rising costs. 

She says food costs are up 4.6%, wages continue to climb, and insurance and rent have gone up as well. 

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Episode Transcript

Speaker 1 (00:09):
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Speaker 2 (00:16):
So you might have noticed a light in the spending numbers,
although many are still struggling, the hospital sector seeing a bump.
Their annual report shows record sales of fifteen point nine billion,
takeaways up three point two percent to four point four billion, cafes,
restaurants up zero point three percent to seven point eight billion.
International visitor spending our climb nine point two percent out
eighty six percent of pre COVID. Marissa bidwires the CEO

(00:37):
of the Restaurant Association, and is with us.

Speaker 3 (00:38):
Good morning, Good morning Mike.

Speaker 2 (00:40):
How do we argue two different things? You argue that
things are tight, they're strained, and yet you're pulling in
record money. How do we explain that?

Speaker 3 (00:47):
Well, Look, as you've mentioned, we've seen record sales for
the year, but that doesn't necessarily mean record profits. The
one point four percent revenue growth that we've seen has
really been eroded by rising costs. Food prices are at
four point six percent, wages continue to climb, and insurance
and rent have all gone up as well. So while
the numbers look good, on paper, margins are tighter than

(01:07):
ever from operators.

Speaker 2 (01:09):
We have seen those spending increase in hospital for the
last couple of months. There's something going on there. Do
you know what it is? Is it tourism or is
it locals just feed up and they want a sandwich
in the beer.

Speaker 3 (01:18):
Look from what we're seeing, it is an uptick in
tourism numbers, which is such a positive sign for our
industry and very much welcomed.

Speaker 2 (01:27):
Is it the immigrant issue as well, in the sense
that are we over hospited? In other words, people come
to the country and they go and I'm going to
buy myself a cafe, whether they know what they're doing
or not.

Speaker 3 (01:38):
Look, I think, you know, hospitality is a very accessible
business model, but I think that's what makes it dynamic.
That's why as a consumer of hospitality, you know you're
in a great position. There's lots of people wanting to
open businesses, try creative, you know sort of business models,
so it really is great for consumers. However, it does

(01:58):
mean that there is some risk with that business model.
That's why we always encourage people to seek business advice
before opening the doors.

Speaker 2 (02:06):
People still seem to be piling up though don't they.

Speaker 3 (02:10):
Well, look it is we are seeing some subdued numbers
in terms of diners. Your household budgets are constrained, but
people are still dining out. They're just adjusting the way
they're dining out, spending a bit less, grabbing the shared plates.
They still want to dine out. Kiwi's love hospit and
that's why our industry continues to keep moving forward.

Speaker 2 (02:32):
There's also a luck story, isn't there If you're near
the CRL in Auckland, if you're not in the tourist
area like Queenstown. You know what I'm saying. If you're
in the wrong place, you've got trouble and there's not
a lot you can do about it.

Speaker 3 (02:43):
Absolutely, and we've seen that. We've seen you know, some
regions have been hit harder. Our CBDs are struggling as well.
We haven't seen the sort of foot traffic get back
to pre COVID levels yet. So look, there is it's
a two feet economy in a lot of ways. There
are some areas that are doing very well and others
that are struggling.

Speaker 2 (03:01):
All right, Marissa appreciating Marissa Bidwell, chief executive of the
restaurant Association.

Speaker 1 (03:06):
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