Centrix data reveals 2,564 hospitality businesses shut down in the past 12 months, marking a 19% year-on-year increase.
Liquidations in the sector also rose, from 199 to 297, notable closures include Pacifica in Napier and Fortune Favours in Wellington.
Industry Reaches “Tipping Point” Amid Financial Pressures
Chris Wilkinson of First Retail Group said many operators had simply run out of room to move. “It gets to a tipping point where people can’t and won’t pay. That’s the biggest challenge that we’re finding everywhere. So you’ve got really good businesses that are struggling or going under. They’ve reached that tipping point.”
He said the craft brewing market, including Fortune Favours, had been hit hard as consumers pulled back on “premium” products. Businesses stuck in the “mass middle” with undifferentiated offerings were most at risk.
Lone Star, for example, has introduced smaller, more efficient restaurant models, while Indian restaurant groups were expanding established businesses into new sites. “It’s really all about evolution and it’s the businesses that aren’t evolving that are the ones that are really struggling.”
Rising Operating Costs and Weakened Demand Impact Sector
Restaurant Association chief executive Marisa Bidois said the industry was under severe strain. “We’ve seen costs increasing exponentially, and a subdued customer market with rising expenses hitting people at home as well. So that impacts our industry too.”
Flexible working and lower visitor numbers have hurt weekday and CBD dining. “Many of them say that today trade has changed as result of that. We’re also not back up to our pre-Covid visitor numbers to the country as well.”
Bidois pointed to “green shoots” in Canterbury, Otago, and farming communities, with expectations of a lift as interest rates ease and warmer weather draws people out.
Hospitality Closures Threaten Urban Economic Vibrancy
University of Auckland lecturer Antje Fiedler warned that widespread closures undermine the vibrancy of towns and cities. “If you walk along the street and there are a lot of shops for rent or closed, it’s probably, for consumers, not so desirable to go shopping.”
She said international students and tourists could provide an “outside boost”, while suggesting the government consider infrastructure spending to stimulate confidence.
Infometrics chief forecaster Gareth Kiernan said hospitality had been buoyed for a time by the tourism rebound, but that recovery had now stalled.
Modest Growth in Food Sales as Consumer Caution Persists
According to new data from Statistics NZ, food and beverage spending volumes edged up 0.2% in both the December 2024 and June 2025 quarters.
However, households remain cautious—particularly in urban centres. “Areas of more discretionary spending such as hospitality will probably struggle to attract dollars for another six months,” he said.