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New Zealand’s hospitality industry recorded annual sales of $15.99 billion for the year ending June 2025, according to the Restaurant Association’s latest Hospitality Report.
While total sales reached record levels, the Association says many operators continue to face challenging trading conditions as rising costs and weaker discretionary spending put pressure on margins.
“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,” says Restaurant Association chief executive 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. Households continue to face higher rates, rents, insurance and everyday living costs, with dining out often among the first expenses to be reduced.
The Reserve Bank’s recent official cash rate cut to 2.5 per cent may offer future relief, but operators report no immediate improvement in consumer spending.
Regional trends
The report highlights a two-speed recovery, with tourism and export-focused regions leading growth while major cities remain subdued.
Nelson recorded the strongest annual increase at 15.1 per cent, followed by Queenstown-Lakes at 14.2 per cent.
Auckland and Wellington city centres continue to lag, with office occupancy rates estimated at 35–40 per cent below pre-pandemic levels. Auckland’s modest 1.2 per cent growth was driven mainly by suburban rather than central city venues.
International visitor arrivals reached 3.38 million in the year to June 2025, with spending up 9.2 per cent to $12.2 billion. In real terms, however, international spend remains about 86 per cent of pre-COVID levels.
| Sector | Annual sales | Growth rate | Notes |
|---|---|---|---|
| Takeaway food services | $4.4 billion | +3.2% | Benefitting from ongoing changes in consumer behaviour |
| Catering | $1.3 billion | +2.2% | Continued post-pandemic recovery |
| Pubs, taverns and bars | $2.1 billion | +1.7% | Moderate growth amid cost pressures |
| Cafés and restaurants | $7.8 billion | +0.3% | Margins remain under strain |
Workforce and wage pressures
Hospitality employment reached a record 146,300 in 2024, but shortages of skilled kitchen and senior front-of-house staff continue to drive wage growth.
The Association’s 2025 Remuneration Survey found average labour costs now account for 40 per cent of turnover — the highest level on record.
Many operators are responding by simplifying menus, cross-training staff, and investing in professional development.
Industry outlook
Marisa says changing consumer habits may represent a permanent shift, requiring new business models and more efficient operations.
“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,” she says.
Despite ongoing pressures, the Association sees cause for cautious optimism. Lower interest rates are expected to improve household cashflow, while regional strength and a continued tourism rebound point to long-term opportunity.
“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,” Marisa says.
