While the hospitality industry in New Zealand will survive the effects of the pandemic, the truth is the cure may be worse than the disease.
The industry will lose a high proportion of outlets and the big question is if they were dying before COVID-19. The simple truth is that the industry has been under pressure for some years through the sheer number of outlets which impacts on profitability. And this reduction may help save the rest.
All the same, the effect on the good operators with long standing reputations is shameful. The damage has already been done with continuing overhead and wasted stock. The idea that all will be well in moving to a lesser lockdown state is a fallacy. Level 3 is simply Level 4 with KFC.
While takeaways and home delivery are getting a shot in the arm, there is still the added costs for those outlets who do not already have a contactless delivery option set up. Going to a third-party delivery provider such as Uber Eats, reduces already tight margins. All this while the Government is still convincing people to stay at home and not gather – so no restaurants will be allowed to open in the short to mid-term.
The supply chain remains strong and product is still clearly available but many suppliers in this category have already developed home delivery programmes just to stay alive because there are few commercial buyers. Then when hospitality businesses do open again there is the problem that a lot of outlets will be on COD terms as everyone struggles with cashflow.
One area that may benefit is second-hand equipment – with outlets closing second-hand gear will be in abundance.
The industry is sadly very aware that there will be low margins, business closures and job losses. It will take years to recover, and only those with good business skills will survive. Not so much the “new normal” as the “next normal”.
