Hospitality industry hospitality report released by the Restaurant Association.
New Zealand’s hospitality industry has reached a significant milestone, posting record annual sales of $15.99 billion in the year ending June 2025, according to the Restaurant Association’s 2025 Hospitality Report.
Behind that headline figure lies a more complex reality – one with consumer spending changes, food costs rises, and operational pressures that are squeezing margins. Every dollar of that 1.4 per cent sales growth has been hard-won. It’s been earned against substantial cost increases that continue to apply pressure across the sector.
How different segments are faring
- Cafés and restaurants—traditionally the heart of the industry—reached $7.8 billion in sales but grew by only 0.3 per cent, highlighting the delicate balancing act between rising costs and customer price sensitivity.
- Takeaway food services lead with $4.4 billion in sales for year ending June 2025, up 3.2 per cent—reflecting shifts in consumer behaviour toward more affordable dining options.
- Catering reached $1.3 billion in sales, up 2.2 per cent, showing steady post-pandemic recovery.
- Pubs, taverns and bars recorded $2.1 billion in sales, up 1.7 per cent.
The cost crunch
Food price inflation reached 4.6 per cent in the year to June 2025—nearly double the general inflation rate of 2.7 per cent. At the same time, households are dealing with rising rates, insurance premiums, rents, and everyday living costs. And when budgets tighten, dining out is often one of the first expenses to go.
While the Reserve Bank’s recent OCR cut to 2.5 per cent signals potential relief on the horizon, operators report they’re yet to see meaningful change in customer spending patterns at this stage.
A tale of two-speed economy
The report highlights New Zealand’s two-speed economy, with export-driven and tourism-focused regions leading the recovery, while major cities remain subdued.
Export-driven and tourism-focused regions are leading the charge. Nelson posted standout growth of 15.1 per cent, with Queenstown-Lakes close behind at 14.2 per cent.
Meanwhile, major city centres continue to struggle. Auckland and Wellington CBDs are still facing office occupancy rates of 35–40 per cent below pre-pandemic levels. In the larger cities, suburban venues are driving growth.
Tourism: a silver lining
International tourism remains one of the sector’s bright spots. The year to June 2025 saw 3.38 million visitor arrivals, with spending up 9.2 per cent to $12.2 billion. International visitor spending still sits below pre-COVID levels, meaning there’s still ground to recover.
The workforce challenge
Hospitality employment hit a record 146,300 in 2024. Operators report an easing of staffing pressures, however the shortage of skilled kitchen and senior front-of-house staff continues.
The 2025 Remuneration Survey revealed labour costs now average 40 per cent—the highest on record—adding to the challenges of increased other key operational costs.
Operators are responding creatively: simplifying menus to improve efficiency, cross-training staff for greater flexibility, and investing more heavily in training and professional development to retain talent.
Reasons for optimism
Despite the challenges, there is genuine optimism as we head towards 2026. Lower interest rates should eventually boost household cashflow, while resilient regional performance and strong tourism recovery demonstrate the sector’s underlying strength.
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 serve as the cornerstone of our communities.
For operators, the message is clear: the path forward requires agility, innovation, and a willingness to embrace new ways of working. Those who can navigate these choppy waters stand to benefit as economic conditions gradually improve.
Restaurant Association members can download the full free electronic copy of the 2025 Hospitality Report by clicking here (Not a member yet? Find out why you should join). The Report can also be purchased here.
Restaurant Association in the media talking about the 2025 Hospitality Report:
- Evolution rather than growth’: Restaurant Association shares its 2025 Hospitality industry snapshot – NZ Herald
- Hospitality spend surges in some small regions, but lacklustre in bigger centers – Stuff
- Restaurant Association warns cost pressures squeezing hospitality profits – NZ Herald
- “Margins are tighter than ever”: Hospo struggles despite record high revenue – NewstalkZB
- Restaurant Association warns rising costs hitting profits – RNZ
- 1News 15 October (7.00mins into episode)
- Breakfast – interview with Marisa Bidois 15 October (57mins into episode)
- ThreeNews 15 October
- Nelson’s hospitality sector leads the country but margins remain tight – The Press
- Hard Work, Thin Rewards: Hospitality’s record $15.99 billion year – Hospitality Business