Restaurants Need to Adapt as Cost of Living Cuts Entrees from Menu – Expert
The head of one of New Zealand’s most experienced food and beverage PR agencies says more public support is needed to help thousands of restaurant and cafe owners survive the cost of living crisis.
According to the latest industry data for 2024, there are over 9,000 cafes and restaurants in New Zealand. The sector employs over 80,000 workers and generates $7.3bn in revenue.
Research shows profit in the hospitality industry has fallen 0.4% over the past four years in line with a decrease in household discretionary incomes, which has seen New Zealanders limit their spending on dining out.
Fleur Revell-Devlin, director of Auckland-based Impact PR, which has specialised in food and beverage PR for over twenty years, says that while most of us would like to dine out more, new figures show 42% of Kiwis say they are going out less and three-quarters of these say the cost of living pressure is the primary reason.
She says the impact of the cost of living crisis on the hospitality sector has been significant.
“Prior to Covid, diners typically ordered an entree, main course, and dessert. Nowadays, they often choose only two of these options, leading to a reduction in service and the associated revenue for restaurants.
“Additionally, people are consuming less alcohol, opting for a single glass of wine and a couple of beers instead of a full bottle and multiple beers. Although the number of customers hasn’t decreased, the average spending per visit has dropped considerably compared to four years ago,” she says.
Revell-Devlin says the public needs to embrace new cost-saving technologies such as ordering and paying through QR codes at the table – to help reduce restaurant overheads and ease the impact of staff shortages which can cripple a small business.
“Any time you have restaurant staff tied up processing payments at the till is a wasted resource that most hospitality venues cant afford to carry.
“Restaurants need to see greater adoption of these mobile payment technologies from diners to introduce efficiencies into their operation. Even a small improvement in margin can make the difference between a business’s ability to survive the year,” she says.
Revell-Devlin says her advice to those businesses in the retail and hospitality sector who are struggling is to urgently embrace change.
“They need to look at the business and where immediate innovation needs to occur. Everything matters, in-store or in a restaurant; how it smells, how it looks, the calibre of your staff.
“In terms of hospitality venues they need to ensure they are appealing to a wide range of customers with a variety of tastes, being different and creative is the key to surviving in a tightened market.
“Embracing flexibility in their offerings is also crucial. This might mean introducing more affordable options, such as smaller portion sizes or fixed-price menus, which can attract budget-conscious diners without compromising on the overall dining experience.
“Seasonal and local ingredients can help reduce costs and appeal to customers interested in sustainability and supporting local businesses.
“Additionally, leveraging social media and digital marketing to highlight specials, events, and unique dining experiences can help attract new customers and retain regulars by keeping the restaurant top-of-mind in a competitive market,” she says.
Revell-Devlin also stresses the importance of collaboration within the industry.
“Hospitality businesses should consider partnering with local suppliers, other restaurants, or community organisations to create unique experiences that can draw in crowds. For example, hosting joint events, pop-up markets, or themed dining nights can not only provide a unique draw but also share the burden of marketing and operational costs.
“Building a strong community presence and creating an inclusive environment can foster customer loyalty and generate word-of-mouth promotion, which is invaluable in tough economic times,” she says.
She says hospitality businesses should also consider utilising the services of an agency specialising in food and beverage PR.
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