Increased food costs and a significant change in foot traffic pose challenges for local eateries
Restaurants in Rotorua, New Zealand, are grappling with the impact of a rising cost of living on their businesses. The combination of increased food costs, wages, overheads, and a sharp drop in customers has left many struggling to stay afloat. Award-winning restaurant owner Ray Singh, who owns The Indian Star and Urban Gusto, shares his experience of the challenging times. Singh highlights the significant change in foot traffic and the difficulties of breaking even in the current climate. As the cost of living crisis takes its toll on consumers, restaurants are feeling the effects and searching for ways to adapt.
Rising Food Costs and Staff Reductions
Ray Singh, owner of The Indian Star, discusses the impact of soaring food costs on his business. Before the pandemic, Singh paid $32 for 20 liters of soybean oil, but now he pays $80, more than double the previous price. Butter prices have also skyrocketed, with Singh now paying $8 for 500 grams, compared to 99 cents in the past. The rising cost of rice has made it impossible for Singh to continue providing free rice with their curries. These increased food costs have forced Singh to reduce staff numbers from 15 to 11 due to a drop in local foot traffic. The combination of rising expenses and reduced customer numbers has left Singh struggling to break even.
Impact on Profit Margins and Business Outlook
The Restaurant Association reports an 8% increase in food prices over the past year, with fruit and vegetables rising by 22% and meat, poultry, and fish increasing by 7% – the fastest increase in four decades. Marisa Bidois, the association’s chief executive, highlights the notoriously slim profit margins in the industry, typically ranging from 2-4%. However, many businesses are now focused on breaking even due to the current customer downturn. A survey conducted by Buy NZ Made reveals that 70% of New Zealand businesses believe the next 12 months will be tougher than the last. The challenges faced by small businesses in the hospitality industry are even greater than those experienced during the disruptions caused by the pandemic.
Customer Downturn and Reduced Hours
Deepak Kundal, owner of six restaurants and one cafe in Rotorua, shares his experience of the cost-of-living crisis. Kundal explains that while they strive to provide high-quality food, passing on the inflation to customers is challenging. The recent member survey from the Restaurant Association indicates that managing the customer downturn is the biggest challenge faced by 35% of businesses. Kundal has not had to lay off staff but has reduced their hours from 40-45 a week to 35. He shares an encounter with a local who revealed that they are dining out less to save money by cooking at home. The financial strain faced by individuals directly impacts their spending habits, making it difficult for restaurants to thrive.
Dependence on Tourism and Weather Factors
Rotorua restaurants heavily rely on tourism for their income, particularly visitors from Auckland. However, the weather over the winter months has not been favorable, deterring potential tourists from visiting. Kundal points out that people are less likely to go on holiday when it’s raining, and the recent school holidays saw seven consecutive days of rain. Additionally, the absence of conferences, which usually bring in 600-700 people, has been keenly felt by local businesses. However, the upcoming influx of cruise ships from Tauranga is expected to drive up customer numbers, offering a glimmer of hope for the struggling restaurants.
Conclusion:
The cost of living crisis in Rotorua has had a profound impact on the local restaurant industry. Increased food costs, reduced foot traffic, and a drop in customer spending have left many establishments struggling to break even. Restaurant owners like Ray Singh and Deepak Kundal have had to make difficult decisions, such as reducing staff numbers and cutting back on hours. The challenges faced by Rotorua restaurants are indicative of the broader struggles experienced by small businesses across New Zealand. As they navigate these uncertain times, the hope remains that the return of domestic and international tourists will bring relief and restore the vibrancy of the local dining scene.
Leave a Reply