Editorial: Market rules over dining on holidays

When the Holidays Act came into force last year, the Restaurant Association foresaw a "frightening scenario". New Zealand, it said, would be pitched back into something akin to the closed-at-the-weekend era. Mass closures of bars, cafes and restaurants on public holidays would be the consequence of a law that required employers to pay time-and-a-half plus a day in lieu to staff working on those days. In addition, the association argued, establishments that stayed open would face the wrath of customers because of the inevitable need to impose a menu surcharge of 15 or 20 per cent to recoup the extra costs imposed by the act.
Duly, the circumstances ideal for that scenario emerged this holiday period. The falling of Christmas Day and New Year's Day on Saturdays meant businesses faced two lots of four-day public holidays, and the new law faced the most extreme examination of its implications. Duly, there were mass closures, and the widespread use of a surcharge. In Auckland, at least, the rate of closure appeared to clearly outstrip that of Easter last year, soon after the new law took effect. Yet somehow the scenario did not pan out quite as the Restaurant Association envisaged.

Most notably, customers were not, by and large, averse to paying a surcharge. Some might have been happy just to find a restaurant or cafe open. But, more likely, other factors were at work. Many people, for example, are accustomed to paying such surcharges overseas. When out of this country, they are also used to finding most businesses closed on public holidays. And many might have been happy to acknowledge the rationale for this section of the Holidays Act - that it is appropriate that people required to work on days of national, cultural or religious significance receive recognition for the fact they have given up a break enjoyed by others. And that businesses should be able to recoup the money associated with that recognition.

The law does not, however, create an easy situation for cafes and bars. Many small establishments clearly believe it is not profitable to open for even ordinary public holidays, let alone the extreme circumstances of this Christmas-New Year period. That is their choice, although some must have closed with reluctance, given the opportunity offered rivals to lure their regular clientele. Many would have been even more ill at ease upon reading of the bumper crowds often enjoyed by those that chose to open.

Even for businesses that put out the welcome mat, there were quandaries. Those that elected to impose a surcharge must have worried about losing trade to the establishment down the street that had no such fee. A restaurant that advertises there will be no surcharge should, of course, end up busier than one which adds 15 per cent to the bill. That fact caused some restaurateurs to hold off imposing the extra fee last Easter, and even on this occasion, but to warn they had not ruled it out.

Their reluctance to put a surcharge in place is likely to persist only if a large number of businesses are open, and competition fosters an eager pursuit of customers. The relative scarcity of places to eat and drink over the Christmas-New Year period, allied with the general acceptance of a surcharge, suggest the fee will become the norm.

It will, however, take time for the new law to settle. A period of flux is inevitable, given the personal choices offered to cafe and restaurant owners. The freedom, for example, to open with a full staff, with fewer staff, or to close, depending on their assessment of profitability and competition, and perhaps even their own need for a break. The freedom, also, to charge whatever they want. In the end, such matters will be determined by the market.

As of now, however, it is fair to say that the doomsday scenarios have fallen short of reality. The Holidays Act has extracted a price in the availability and cost of restaurants, cafes and bars on public holidays. But it is one that most people seem happy to pay.