The Restaurant Association third quarter sales snapshot reports shows that Q3 2025 finally delivered encouraging signs of growth, with national hospitality sales growing 5.9 per cent year-on-year to reach $4.05 billion—the strongest quarterly performance we’ve seen in some time.
This growth reflects improved consumer confidence. However, beneath the headline figure lies a complex story of regional divergence, modest sequential growth over the year, and persistent cost pressures that continue to test margins.
Regional performance: strength in unexpected places, pressure in traditional centres
Our largest market, Auckland, recorded sales of $1.6 billion in the third quarter of 2025. While the region’s 7.1 per cent growth lagged behind standout performers like Nelson (+47.5 per cent), Tasman (+11.2 per cent) and Northland (+8.6 per cent), this marked a more positive turn after an extended period of flatline performance. Conversely, several regions experienced contraction in comparison to 2024—most notably the West Coast (-4.8 per cent), Manawatu-Wanganui (-4.2 per cent), and Gisborne (-6.9 per cent)—highlighting the uneven nature of recovery and the vulnerability of smaller markets to seasonal and economic shifts.
There’s also a marked difference between quarters.
While Q3 showed solid year-on-year growth, sequential growth from Q2 2025 (Winter to Spring quarters) was a modest 3.7 per cent, suggesting that momentum is building gradually rather than surging. This tempered pace aligns with broader economic headwinds, including ongoing food price inflation, which rose 4.1 per cent in the 12 months to September 2025 according to Stats NZ.
Annual food price inflation slowed to 4.1 per cent in September 2025. Although this was down from peaks above 8 per cent in 2022, key input costs like meat (up 6.4 per cent) and dairy products continue to pressure operator margins.
Cost pressures despite improved top-line results
Revenue growth has not translated into proportional margin improvement. Food and other operational costs remain elevated. While the Reserve Bank’s November OCR cut to 2.25 per cent signals potential relief, operators continue to face elevated rents and utilities that squeeze profitability. As we hear from many businesses, increased sales are simply covering higher operating costs, rather than generating sustainable returns.
Labour constraints also persist. While unemployment has edged higher, hospitality-specific skills shortages—particularly in kitchens and senior service roles—remain. This limits trading capacity and forces operators to compete for talent through wage increases that further compress margins.
Cafe and restaurant sales reached $1.98 billion in Q3, up 7.3 per cent, while beverage-led venues face headwinds—reflecting how customers are prioritising food experiences in a cost-conscious environment.
By sector cafes and restaurants lead, pubs lag
Cafe and restaurant sales were at $1.98 billion for Q3 2025 (up 7.3 per cent year-on-year), demonstrating strong consumer appetite for dining experiences. Catering services grew 5.5 per cent, reflecting corporate and event recovery. Takeaway food services expanded 6.4 per cent, maintaining their post-pandemic relevance as consumers continue to balance convenience with cost.
However, pubs, taverns, and bars declined 0.2 per cent compared to Q3 2024—a challenge for our venues that are reliant on beverage-led trade. This weakness may reflect shifting consumer spending patterns, with households prioritising food experiences over alcohol-centric socialising amid cost-of-living pressures.
Tourism investment and the path forward
The Association has welcomed the announcement that the Michelin Guide will be coming to New Zealand. This presents a genuine opportunity to elevate New Zealand’s hospitality proposition on the global stage. As international visitor numbers rebuild, initiatives like this help ensure our food and beverage offering is positioned as a core pillar of the destination experience—not an afterthought.
Our sector’s unique strengths—indigenous kai narratives, sustainable sourcing, regional culinary diversity, and award-winning producers—need to be actively promoted to high-value international markets. Regional dispersal of these visitors will be critical to smoothing seasonal volatility and supporting businesses beyond traditional gateway cities.
Future focus
Q3’s results are encouraging but not conclusive. While the sales figures are some of the most positive we’ve seen for some time, growth is still fragile and uneven. As we head into the critical Summer trading period, operators face a delicate balancing act and will still be managing costs tightly to protect viability.
However, falling interest rates, stabilising food prices, and growing international arrivals are creating better conditions for Q4 and beyond. What’s needed now is for economic conditions to keep improving so that performance converts to better profit.
If you are not a member of the Restaurant Association, the 2025 Q3 Report is available for purchase to the wider industry for $60.00 +gst. Let us know if you’d like to talk to one of our team about becoming a member, or click here for more information.