Local eateries face the challenges of increased food costs and a significant drop in customers as the cost-of-living crisis takes its toll.
Restaurants in the picturesque town of Rotorua, New Zealand, are feeling the strain of rising costs and dwindling foot traffic. Award-winning restaurant owner Ray Singh, who owns The Indian Star and Urban Gusto, recalls a time when his establishments were bustling with customers, but now he is lucky to have a fraction of the patrons he once had. Singh’s story is just one example of the struggles faced by Rotorua’s dining scene, as increased food costs, wages, overheads, and a sharp decline in customers have left many establishments fighting just to break even. This article delves into the challenges faced by Rotorua restaurants and the impact of the cost-of-living crisis on their survival.
The Changing Landscape of Rotorua’s Restaurants
At its peak, The Indian Star on Rotorua’s popular Eat Streat could seat 130 people for a meal. However, the current reality is far different, with Singh’s restaurant now lucky to have 30 customers at a time. The drop in foot traffic has forced him to reduce staff numbers from 15 to 11, as locals tighten their belts and cut back on dining out. Singh describes the situation as a complete game-changer, with restaurants now waiting for customers instead of the other way around. The struggle to keep up with increasing costs and decreasing customers has become the new norm for Rotorua’s dining establishments.
Soaring Food Costs and Reduced Profit Margins
Singh’s challenges extend beyond a decline in customers. He grapples with soaring food costs, with prices for essential ingredients like soybean oil and butter more than doubling. Before the pandemic, Singh paid $32 for 20 liters of soybean oil, but now he pays a staggering $80. Similarly, the price of butter has skyrocketed from 99 cents for 500 grams to $8. These increased costs make it difficult for restaurants to maintain their profit margins, which are already notoriously slim in the industry. Marisa Bidois, the chief executive of the Restaurant Association, explains that profit margins typically range from a mere 2-4 percent even during the best of times. However, many businesses are now struggling just to break even.
The Impact on Small Businesses and the Economy
The challenges faced by Rotorua’s restaurants are not unique to the hospitality industry. Small businesses across New Zealand are grappling with the cost-of-living crisis, which has been exacerbated by the pandemic. A survey conducted by Buy NZ Made revealed a 40 percent increase in company liquidations compared to the same period last year. Additionally, nearly 70 percent of businesses surveyed believe that the next 12 months will be even tougher than the previous year. Deepak Kundal, owner of six restaurants and one cafe in Rotorua, echoes these sentiments, emphasizing the difficulty of passing on inflation costs to customers while maintaining quality. The struggle faced by small businesses has far-reaching implications for the local economy.
The Role of Tourism and Weather
Rotorua’s restaurants heavily rely on tourism for their income, particularly visitors from Auckland. However, the impact of the cost-of-living crisis is compounded by external factors such as the weather. Kundal notes that the rainy winter months have deterred holidaymakers, as people are less likely to go on vacation when it’s raining. The absence of conferences and a decline in cruise ship visitors have also contributed to the decrease in customer numbers. While the recent return of some overseas and domestic tourists has provided a glimmer of hope, locals are not frequenting restaurants as they used to.
Conclusion:
The cost-of-living crisis in Rotorua has taken a toll on the town’s vibrant dining scene. Rising food costs, reduced profit margins, and a significant drop in customers have forced restaurants to adapt and find ways to stay afloat. Small businesses, like Singh’s The Indian Star and Kundal’s multiple establishments, face an uphill battle as they navigate the challenges of the current economic climate. The impact is not limited to the hospitality industry alone, as small businesses across New Zealand struggle to survive. As Rotorua’s restaurants continue to weather the storm, the hope remains that a resurgence in tourism and local support will help them regain their former glory.
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