Revenue in New Zealand's hospitality sector is down an average of 25 per cent. Photo / AP
Revenue in New Zealand's hospitality sector is down an average of 25 per cent. Photo / AP
Close to 200 hospitality businesses are on the brink of collapse due to Covid-19, says the chief executive of the Restaurant Association.
Marisa Bidois said restaurants and cafes were experiencing a significant downturn in customers compared to this time last year.
The sector had recorded an average 25 per centdrop in revenue due to fewer people dining out over fears surrounding the Covid-19 outbreak, equating to about $6 million in lost revenue each week. This figure is expected to increase each week.
Ethnic restaurants and eateries had been initially the worst hit following news of the outbreak, but this had now spread to all operators throughout the sector.
The association hopes the impact would not be far-reaching over the long term, but Bidois said it was unsure at this stage, and it continued to field calls from members every day with concerns relating to revenue taking a hit from fewer people in the restaurants, the most common concern, followed by concerns of the increased cost of some goods.
"We have 176 members that are currently looking at potentially restructuring their businesses or closing down.
"My team have been in tears on the phone speaking to members," Bidois told the Herald.
"These people are not making huge profits, they're Mom and Pop businesses, and for the last few weeks they have been paying themselves less than the minimum wage, if at all."
A recent survey by the association found that 66 per cent of members said that they were experiencing a downturn compared to this time last year. Of those, the members said they had noticed fewer New Zealanders dining out.
Bidois said the findings were not surprising given the panic-buying the country had experienced in recent weeks, with people preparing to stay at home.
"We're encouraging people to continue to dine out," Bidois told the Herald, adding that it was preparing to launch a campaign to encourage New Zealanders to dine out.
Hospitality businesses throughout the country had been affected by the outbreak and it had been in contact with operators in Queenstown, Auckland, Christchurch and Taranaki, among other areas, Bidois said.
The Auckland sector had been hit the hardest, she said.
Hospitality contributes more than $11 billion a year to the economy and is one of the nation's largest employers.
The association estimates that more than $12 million had already been lost in revenue in the sector over the past two weeks and it expected the weekly loss to continue to climb.
"[The financial impact is] $6 million a week at this stage but that will increase as the weeks go on. We think that creep up higher as the weeks go on."
The Restaurant Association is meeting with Finance Minister Grant Robertson and Tourism Minister Kelvin Davis this morning to discuss the specifics of financial support for those businesses hit the hardest.
It is calling for a wage subsidy of $500 per fulltime employee and $250 for part-time employees, similar to emergency packages that had been granted in the past, Bidois said.
"That basically would keep those people, and the most vulnerable, employed, keep businesses running. We're thinking that would be a fixed-term period of six to eight weeks while they reassess and see how things go," she said.
"We knew there would be some impact, but certainly seems to be more than we anticipated."
Bidois was unsure of how many businesses would need financial support, but encouraged consumers to continue to dine out and support local businesses.
"We're trying to remain optimistic and hoping that people will continue to dine out."
