Hospitality sales increased in the second quarter of 2026. However, the latest figures show that growth remained modest in most regions and uneven across the industry.
National hospitality sales reached $4.02 billion during the quarter, representing a 2.9 per cent increase on the same period in 2025. This was a significant slowdown from the 6.5 per cent year-on-year growth recorded in the first quarter. This reflects the changing economic conditions experienced by businesses as the year progressed.
Experiences varied considerably across businesses and regions. Quarter two was noted for rising fuel and food costs, continued pressure on household budgets and uncertainty caused by global events. This meant that, for many operators, conditions remained extremely challenging. Anecdotally, we heard that April and June were particularly tough.
Our café and restaurant sector continued to perform more strongly than the industry overall, recording $2.01 billion in sales and year-on-year growth of 6.4 per cent. However, this was also down from the 8.1 per cent growth recorded in the first quarter.
On the surface, any increase in sales is welcome. However, annual inflation rose to 4.1 per cent in the June quarter. And prices for restaurant meals and ready-to-eat food increased by 3.1 per cent over the year. Taken together with total hospitality sales growth of 2.9 per cent, the figures point to little, if any, underlying growth in the volume of trade across the industry.
We continue to hear from members that even where revenue has improved, higher turnover has not translated into better profitability. Costs are rising at least as quickly as sales, while customers remain careful about how often they dine out and how much they spend when they do.
Pressure on both sides of the counter
On top of the fuel price increases and higher household costs continuing to constrain customer spending, food costs remained a particular concern. Overall food prices were 2.5 per cent higher in June than a year earlier. Meat, poultry and fish prices up 6.2 per cent.
Members have told us that there is increasingly little room either to absorb further operational cost increases or pass them on through menu prices without affecting demand. After years of finding efficiencies and doing more with less, there are fewer meaningful savings left to make.
This was reflected in our June business survey. Forty-three per cent of member respondents reported lower revenue than in the same period last year. Around two-thirds said their business was less profitable. Food costs were the most commonly identified challenge, alongside lower customer demand and wage costs.
Very different results across sectors and regions
Performance varied considerably across the industry. Alongside the 6.4 per cent growth recorded by cafés and restaurants, clubs grew by 5.4 per cent. Growth in pubs, taverns and bars was 3.4 per cent. Takeaway food service sales declined by 1.0 per cent, while catering sales fell by 6.1 per cent.
Regional results were equally mixed. Manawatū-Whanganui recorded the strongest growth, with sales increasing by 15.6 per cent. This was followed by the West Coast at 15.4 per cent and Canterbury at 9.8 per cent.
In contrast, growth in Auckland slowed to just 0.8 per cent. Given that Auckland accounts for approximately 39 per cent of hospitality sales nationally, the near-stalling of sales in our largest market had a significant effect on the overall result.
The gap between the strongest and weakest-performing regions reinforces what members have been telling us: conditions remain inconsistent and difficult to predict.
Where to from here?
There are some early signs of cautious optimism. Fuel prices eased from their peaks towards the end of the quarter, while preliminary outlook for quarter three is improved. July sales showed a noticeable improvement, jumping 7.8 per cent over the previous year. We will need to see whether that momentum continues.
The key for our industry is greater stability. Operators need a period in which costs, customer demand and the wider economic environment become more predictable.
The second quarter was not the clear step forward many had hoped for at the beginning of the year. Growth continued, but it was modest, uneven and, in many cases, absorbed by rising costs. A genuine recovery will not be measured by marginally higher sales alone; it will begin when sales growth starts to outpace the rising cost of doing business.