Rising costs, cautious consumers, and a tight labour market have created the perfect storm for New Zealand’s hospitality industry. For the first time, operators are reporting that wage costs have reached 40%, marking a critical threshold that’s forcing businesses to rethink their operational strategies.
Rising costs, cautious consumers, and a tight labour market have created the perfect storm for New Zealand’s hospitality industry. The Restaurant Association’s Remuneration Report, based on data from 13,945 employees across more than 100 positions, reveals an industry doing its best to move forward despite unprecedented challenges. But the numbers tell a sobering story about an sector stretched to its limits.
The 40% wage cost watershed
The average hourly rate across the industry now sits at $27.84, with salaried roles averaging $83,415. While wages continue to grow, the pace has slowed dramatically – hourly rates increased by just 2.54% in 2025 compared to 2024, and salaries by only 0.50%.
More concerning is what this means for business viability. When wage costs hit 40% of revenue and food costs typically account for another 28-35%, operators are left with combined costs consuming up to 75% of total revenue before considering rent, utilities, and other fixed expenses. For businesses operating on 3-5% net profit margins, this leaves virtually no buffer for unexpected costs or economic downturns.
Clear pathways despite pressure
Despite financial constraints, the industry maintains clear progression pathways. Kitchen hierarchies show defined advancement opportunities, from Kitchen Hand ($25.03/hour) through Commis Chef ($26.83), Chef de Partie ($29.63), Sous Chef ($32.11), Head Chef ($36.81), to Executive Chef ($46.62/hour or $114,879 for salaried positions).
Front-of-house progression follows a similar pattern, starting with basic service roles earning around $25.08-$25.83/hour, progressing through Wait Staff ($25.52), Duty Manager ($29.16), Maitre D’ ($29.97), and up to Restaurant Manager ($32.96).
At the top end, management positions command strong compensation, reflecting their critical importance in navigating current challenges. General Managers now average $133,208/annum, Financial Controllers $136,008, and Directors of Sales and Marketing $138,415 – roles that saw some of the largest pay increases this year.
Regional markets tell different stories
Auckland dominates the sector, employing 35.8% of surveyed staff and reporting the second-highest average hourly wage ($28.35), though with the widest wage variance ($7.50). This market dominance creates upward pressure on wages nationally.
Queenstown/Southern Lakes leads with the highest average hourly rate ($28.51), reflecting the competitive nature of this high-turnover tourism market. Canterbury/Central South Island, home to 11.9% of surveyed employees, offers an overall average rate of $27.66/hour, while Wellington sits just below the national average at $27.65.
Regional role differences reveal interesting market dynamics. Head Chefs earn the most in Hawke’s Bay ($41.51), while Bar Managers in Gisborne/East Cape lead the country at $38.50/hour.
The strategic response
In light of rising wage costs, industry leaders are implementing various strategies to maintain viability. Productivity improvements through better staff scheduling and cross-training are becoming essential. Technology investments to streamline operations, menu changes that improve gross margins, and careful pricing adjustments are all being considered as operators seek to balance sustainability with competitiveness.
As the report indicates, operators are faced with daily choices and trade-offs. The industry’s commitment to supporting staff remains strong despite challenging conditions, but finding the right balance between fair pay, sustainable operations, and strong team culture has never been more critical.
The key takeaways are clear: wage growth continues but at a slower pace, the 40% wage cost benchmark demands strategic response, role progression remains a powerful retention tool, and regional variations require tailored approaches. Success will depend on how effectively operators can manage these competing pressures while maintaining the people-driven culture that defines New Zealand’s hospitality industry.
More information
- An Executive Summary for the 2025 Remuneration Survey Report can be downloaded here.
- The full 2025 Remuneration Report, including detailed regional breakdowns, sector analysis, and year-on-year comparisons, is available here.