Services sector activity on the rise
A LACK of staff and overworked owners may be the reason for a wave of Dunedin cafes and stores being listed for sale.
About 10 wellknown Dunedin hospitality businesses have been listed for sale recently, including Zucchini Brothers, Del Sol and Long Dog Cafe.
Business owners looking to sell could not be reached, were unwilling to discuss their reasons or too busy to talk, but others in the industry say staffing and food prices may be to blame.
Hospitality Association branch president Mark Scully said lack of staff was the biggest contributing factor to businesses selling up.
Without enough hands to set up, work and tidy the premises after closing owners were having to take much more of the burden on themselves.
It left some working 7080 hours a week.
‘‘People have had enough.’’ Coowner of Nova Cafe, Jizo Japanese Restaurant and Brew Bar Mark Fraser said most hospitality businesses would have had at least one or two foreigners on the payroll, but since the borders closed that manpower gap had been hard to fill.
Another significant issue was the price of ingredients.
Canola oil, which was used for deep frying, was a prime example. It had doubled in price since the start of the year.
Prices had gone up across the board and it would be ‘‘really tough’’ to enter the industry at the moment, he said.
ABC Business Sales hospitality specialist and broker Jason Marshall said Covid19 gave owners a lot of time to reevaluate what they wanted to do.
He was managing a handful of restaurant and cafe listings, such as Nichol’s Garden Cafe, Best Cafe and Moiety.
Most of the people he was working with were selling because they wanted a change of lifestyle.
He did not believe that more hospitality businesses were selling, but more highprofile ones were.
Dunedin had ‘‘fared extremely well’’ throughout Covid19 and he believed it was a great time for people to enter the hospitality industry.
However, Mr Scully said it was not a good time to be on the market, as the last three years of trading would be an inaccurate reflection of a business’s usual revenue.
People who were buying in this market would have to rely on trust alone.
One familyrun business coowner said they had a conditional offer on their cafe, but it was for a lot less than they were asking.
There were people out there looking to buy, but there was not as much interest as she initially expected.
WELLINGTON: Activity in the services sector is at its highest level in nearly a year and ahalf, following the return of tourists and the easing of travel restrictions.
The BNZ — BusinessNZ Performance of Services Index (PSI) rose 4.2 points to 58.6 in August, from 51.2 points in
July, which was also above its longterm average of 53.6 points.
Any reading above 50 suggests expansion, while anything below indicates contraction.
There were significant gains in new activity/sales (67.1) and orders/business (66.5) both displayed significant gains, while stocks/inventories (59.6) were at the highest level since November 2019.
Although employment (50.8) remained somewhat lacklustre and supplier deliveries (49.6) remained in contraction, the other subindex values were more than enough to push the overall result higher.
In addition, the proportion of positive comments for August at 56%, topped the negative, with 58% negative comments in July and 59% in June.
BNZ senior economist Doug Steel said the New Zealand Performance of Services Index was strong compared with others in the world, with Australia at 53.3 points, while Europe and the United States were in contraction.
‘‘I should note it’s not all oneway traffic,’’ Mr Steel said.
‘‘If you look at the retail trade component, and that’s relatively weak down at 33 [points]. In fact, [it is] quite weak for one month.
‘‘So it seems like there is still a lot of noise in the data as there is in a lot of the economic indicators that we monitor so you want to be a bit careful reading too much into one month, but at face value, it is quite strong.’’
Mr Steel said the combined Performance of Services Index and the Performance of Manufacturing Index
(PMI) released last week indicated the economy was growing faster than initially indicated.
‘‘[The] PCI suggests annual GDP growth up toward 5% in the third quarter of 2022,’’ he said.
‘‘If the PCI is truly bouncing, the key question is for how long,’’ he said. — RNZ