CLICK HERE FOR ORIGINAL ARTICLE BY STUFF – Anuja Nadkarni 

A Wellington cafe worker says working in hospitality would be hard if she was not being paid the living wage.

Joyce Tung, 31, has been working at Seashore Cabaret in Petone, Lower Hutt, as a barista since the cafe opened three years ago.

Tung started out on $17 per hour, but gradually increased to her current wage $22 per hour, slightly higher than the living wage. The living wage is currently $20.55 but will increase to $21.15 in September this year.

On April 1 her bosses, co-owners of Seashore Cabaret Matt Wilson and Freya Atkinson, achieved their three-year ambition to pay all 52 staff the living wage – a base rate of $21.15 or nearly $44,000 a year.

The Seashore Cabaret cafe co-owners Matthew Wilson and Freya Atkinson say happy staff are the key to a successful business. Photo credit: ROSS GIBLIN/STUFF

Tung said her pay determined whether she would continue working in hospitality.

Nearly every other new large office building incorporates cafes and restaurants as an essential offering for tenants.

They helped boost the number of food and beverage outlets in New Zealand last year by 7.4 per cent, and have proved a boon for commercial property owners leasing space.

The biggest jump was in Canterbury where the growth in the number of restaurants and bars was 11.6 per cent as new buildings have been completed and leased as part of the post-earthquake rebuild.

Christchurch has also had a large number of business collapses, sometimes within months of opening, such as the Good Goat, and Chopped, both in Victoria St.

The churn rate of hospitality businesses is about three years on average before the enterprise is sold or closed – although the Restaurant Association said the rate was about seven years for its members.

Bars and restaurants need to become increasingly creative as they absorb staff wage and food price rises especially as the lower spending winter season approaches, according to ANZ commercial and agri-general manager Penny Ford.

She said consumer spending across the restaurant, cafe, bar and nightclub sector grew by 15 per cent over the past two years.

But the median growth in revenue for individual businesses was about 4 per cent – in other words, the spending was spread more thinly than before across more outlets.

Auckland had a 10 per cent increase in outlets, while Wellington had a 3 per cent increase.

Auckland’s bigger population supports about 6500 food and beverage operators compared with 2100 in Canterbury and a similar number in Wellington.

The fastest growing type of outlet nationally was fast food providers.

Rent costs have remained relatively steady at about 7 per cent of revenue since 2014. the ANZ report said.

ANZ’s benchmarking of 43 businesses shows revenue growth was only marginally up and the median results for wages and salaries as a proportion of expenditure was about 35 per cent.

With the Government indicating the minimum wage will increase from $15.75 an hour to $20 by April 2021, Ford said businesses would need to be proactive around managing costs.

“While forecasting wage growth is difficult, and a 27 per cent minimum wage increase would apply only to employees on the minimum rate, any increase would have an impact on the bottom line.

“Finding a point of difference, structuring service offerings and looking at different ways to manage supply chains are ways businesses can deal with this cost increase.”

“If businesses are relying on one input being cheap, like wages, the reality is that business will be vulnerable.”

Businesses were  responding to demand for a different dining experience, whether through a sustainably grown paddock-to-plate story, or catering to the increasing number of people moving out of major cities, Ford said.

The hospitality sector is supported mainly by local with about 80 per cent of revenue from local diners, while international spending varies seasonally to about half the summer level.

Restaurant Association of NZ chief executive Marisa Bidois said Kiwis spent about $10 billion annually on hospitality, which employed more than 120,000 people.

Meanwhile, the latest hospitality to come to market is central Wellington Italian restaurant Pizzeria Napoli.

Current owner Raffaele de Gregorio, an ex-All Whites midfielder, said the business has excellent profit margins, and earnings before interest depreciation and tax last year was $280,000, excluding owner salaries.

​The sale is being managed by Century 21’s Geoff Barnett.

Article by: Chris Hutching, Stuff

With the announcement of the new government to be led by the Labour Party, and confirmation of the policies that have survived coalition negotiations we are now considering how the new policies are going to impact our industry.

Here are some of the areas that have been indicated are going to be changed or implemented:

• Minimum wage increases
• Minimum redundancy protections;
• Fair pay agreements;
• Removing grievance free trial periods;
• Increased entitlement to paid parental leave, and
• Immigration changes

Labour campaigned on implementing many of its proposed changes within the first 100 days so we are sure it will not be long before we are seeing some of these changes start to be implemented or consultation processes be initiated.  The new Minister of Workplace Relations and Safety (and Immigration) will be Iain Lees-Galloway and we have already made contact with his office to request a meeting to discuss our industry.

90 Day Trial Periods

Trial periods will definitely be under review and under Labour’s proposed amendments. Employers will be required to provide a reason for any dismissal within the first 90 days, and employees will be allowed to raise a dispute if their employment is terminated during this time. If the matter does end up in dispute, parties will be allowed representation in the dispute, however lawyers will not be permitted. If resolution cannot be reached between the employer and employee, the referee hearing the dispute will make a final, binding decision which cannot be appealed.

This will have a restrictive impact on employers who will need to ensure they have a justifiable reason for dismissing employees. Employers will need to factor this in when hiring new staff, and will no longer have the safety net of knowing they can dismiss them without cause within the first 90 days.

Paid Parental Leave

Under the current law, employees are entitled to 18 weeks of paid parental leave. This entitlement applies to the primary carer of a child. This leave must be taken in one continuous period. Employers are obligated to keep the employee’s job open for them when they return and dismissal by reason of pregnancy is prohibited. The new government have proposed that the period of paid parental leave is going to increase to 26 weeks and employers will need to factor this increased period in when an employee notifies them of the intention to take parental leave.

Immigration 

Labour and New Zealand First have agreed to decrease the number of new migrants to New Zealand by approximately 20,000 to 30,000/annum. While about a third of these cuts will be to student visas, two thirds will be to work related visas. Labour proposes to achieve these results by setting a higher skill threshold for migrants who are coming to New Zealand, and tightening the Labour Market Test, which they say “ensures that migrants are only doing jobs that New Zealanders can’t be employed to do”.

“As a result of these changes, employers will need to be sure that if they intend to employ a migrant to do a job, this job cannot be done by a New Zealander.” What this means for our industry we are unsure at this time but have reached out to the Immigration Minister for a meeting so we can have a bit of clarity on what this means for immigration.

Overall Impact on Employment Relations in New Zealand

Labour’s policies are reflective of a change from a National led government to a Labour led government. The new policies are largely employee-centric, reflected in the recent announcement to raise the minimum wage to $20 by 2021. In order to comply with the new policies, employers will need to be aware of them, and have plans in place to ensure compliance.

Dealing with the Rising Minimum Wage in your Business

The new government will raise the minimum wage to $16.50 an hour next year and to $20 by April 2021. The Government has not told us how it plans to step its way to $20 an hour, but we can assume annual increases over the next four years. A question we have been asked frequently over the last week is ‘how will we cope with rising wages?’.

We have sought some advice from our sister association in Australia – Restaurant and Catering – where Australian hospitality businesses are dealing with a minimum wage of $18.29 per hour or $694.90 per 38 hour week (before tax). They also have awards which set out overtime and other entitlements to industry staff.

Restaurant and Catering of Australia surveyed their members twice, when wage rates were increased this year and last year. In both the 2016 and 2017 surveys, respondents were asked about the impact of a 2.5 per cent minimum wage increase on their businesses and how they would respond. The 2017 survey found that 37.2 per cent of businesses opted to absorb a minimum wage increase, compared to 27 per cent of businesses in 2016. There was also a 4 per cent increase in the number of businesses which indicated that they would reduce staff because of a 2.5 per cent minimum wage increase (9.7 per cent in 2017 compared to 5.7 per cent in 2016).

There were slight decreases in the number of businesses which indicated that they would reduce the number or length of shifts (10.6 per cent in 2016 and 7.1 per cent in 2017), have the business owner work more hours (19.9 per cent in 2016 and 16.8 per cent in 2017), reduce hours of casual staff (21.3 in 2016 and 15 per cent in 2017) or have family members work more hours (5 per cent in 2016 and 3.5 per cent in 2017). No businesses in 2017 reported that they would reduce overtime compared to 1.4 per cent in 2016.

As you can see, most members of the Australian Restaurant Association’s absorbed the cost of the increase or had the business owner work more hours to compensate for the increase in staff wages.

Many of our members have been talking more about how they can pay a living wage in their businesses, so many may have already been considering how they will do this. However, there will be many other members who need to start thinking about how this will affect their business and what changes may need to be made in order to remain viable over the next four years.

We will continue to keep members updated over the coming months as these policies are introduced. Please do also make contact if you have any specific questions.