New Zealand’s hospitality industry has posted record annual sales of $15.99 billion in the year ending June 2025, according to the Restaurant Association’s latest Hospitality Report.
But despite the top-line growth, the sector remains under significant strain, with operators reporting they are working harder than ever to maintain their businesses in the face of reduced discretionary spending, rising food prices, and escalating wage pressures.
“Every dollar of the 1.4 per cent sales growth over the past year has been earned against substantial cost increases that continue to pressure margins across the sector,” said Restaurant Association CEO Marisa Bidois.
Food price inflation rose 4.6 per cent in the year to June 2025, nearly double the general inflation rate of 2.7 per cent. Meanwhile, households are still grappling with rising rates, insurance, rents, and everyday living costs, with dining out often one of the first expenses to be cut.
While the Reserve Bank’s recent OCR cut to 3.0 per cent (with further reductions expected) signals potential relief ahead, operators report no immediate change in consumer spending.
Regional Analysis
The report highlights New Zealand’s two-speed economy, with export-driven and tourism-focused regions leading the recovery, while major cities remain subdued.
Nelson recorded standout growth of 15.1 per cent, followed closely by Queenstown-Lakes at 14.2 per cent.
Auckland and Wellington city centres continue to struggle, with office occupancy rates 35–40 per cent below pre-pandemic levels. Auckland’s modest 1.2 per cent growth was driven mostly by suburban rather than CBD venues.
International tourism is a bright spot, with 3.38 million visitor arrivals recorded in the year to June 2025 and visitor spending up 9.2 per cent to \$12.2 billion. However, in real terms, international spend remains just 86 per cent of pre-COVID levels.
Sector Breakdown
Takeaway food services: $4.4 billion in sales, up 3.2 per cent – benefitting from shifts in consumer behaviour.
Catering: $1.3 billion in sales, up 2.2 per cent, showing steady recovery post-pandemic.
Pubs, taverns and bars: $2.1 billion in sales, up 1.7 per cent.
Cafés and restaurants: $7.8 billion in sales, up only 0.3 per cent, highlighting the ongoing challenge of balancing rising costs with customer price resistance.
Workforce & Wage Pressures
Hospitality employment reached a record 146,300 in 2024, but the shortage of skilled kitchen and senior front-of-house staff continues to drive wage inflation. The 2025 Remuneration Survey revealed an average labour cost of 40 per cent – the highest on record – adding to the already heavy burden of rising ingredient and operating costs.
Many operators are responding with strategies such as simplifying menus, cross-training staff, and investing in training and professional development.
Future Outlook
The association warns that changes in consumer behaviour may represent permanent shifts, requiring operators to rethink business models and embrace greater efficiency, technology, and customer engagement.
“Hospitality cannot simply pass costs on to customers. We need supportive policy settings, including immigration pathways aligned with industry needs, investment in major events that drive visitation, and initiatives to bring people back into our city centres,” Bidois said.
Despite the challenges, the report points to genuine reasons for optimism. Lower interest rates should eventually boost household cashflow, while resilient regional performance and strong tourism recovery highlight the sector’s enduring potential.
“New Zealanders still value hospitality experiences as affordable luxuries. Our venues remain central to how people connect, celebrate and share life’s moments. By adapting to today’s pressures and preparing for tomorrow’s opportunities, hospitality will continue to be the cornerstone of our communities,” Bidois said.