Hospitality sector faces costs squeeze

Cafes and restaurants are feeling the squeeze as a combination of higher wages and a surcharge hits at a time of peak demand.

Hospitality New Zealand national treasurer Tony Crosbie said bigger cities, including Wellington and Auckland, were ‘‘really hitting hard’’ with the surcharge while operators in smaller cities were less inclined to charge extra or opting to close.

Closing in peak tourist time wasn’t ideal either, he said.

During visits to Kaiko¯ ura and Blenheim over the Christmas period, he saw 60 per cent of the eateries shut for business.

‘‘It’s quite concerning because all the accommodation is chocka and a lot of people had nowhere to go.’’

He said eateries should be opening if possible, and passing on the costs to customers ‘‘where they can’’ to allow for the increased cost of wages.

Nelson’s Lambretta’s Cafe Bar co-owner Rhys Odey said adding a 10 per cent surcharge, which was lower than the standard 15 per cent, was necessary.

Staff working on a public holiday are required to be paid at least time and a half, and if the day falls on a normal work day for the employee, they are also entitled to a day in lieu.

Odey said the 10 per cent surcharge did not come close to recovering the extra needed to pay staff.

However, there had not been any resistance from customers paying a little extra.

River Kitchen Nelson opens on nine out of the 11 annual public holidays and doesn’t increase the bill at the counter.

Co-owner Clare Fleming said the minimum wage increase to $20 in a couple of years might force employers to introduce a surcharge.

‘‘Because at that rate, you might not have an option.’’

Jellyfish Restaurant and Bar owner Debbie Lavery said she did not apply a holiday surcharge as it deterred customers.

But she would eventually have to, given increasing supplier and legislated compliance costs.

‘‘Hospitality is a massive industry for New Zealand and a significant contributing employer, but margins are becoming further compressed and costs skyrocketing.

‘‘Sadly something has to give.’’ Crosbie echoed Lavery’s views on hospitality demands.

He said hospitality was already a challenging business with compliance costs and the government’s hike in the minimum wage would ‘‘tip a lot of them over the edge’’.

‘‘You’ll see it where they all close on public holidays.’’