There’s some positive news for New Zealand hospitality: sales are up.
The latest Restaurant Association figures show the sector recorded $4.02 billion in sales during the second quarter of 2026, up 2.9% compared with the same period last year.
Cafés and restaurants performed even better, recording $2.01 billion in sales, up 6.4% year-on-year.
So why are so many hospitality businesses still feeling the squeeze?
While the headline numbers look encouraging, they only tell part of the story.
Costs are continuing to rise across the industry, including food, wages, rent, fuel and other operating expenses. Food prices alone were 2.5% higher in June than a year earlier, while meat, poultry and fish prices increased by 6.2%.
At the same time, customers are still watching what they spend, leaving venues with a tricky balancing act: absorb increasing costs or raise menu prices and risk putting additional pressure on customer demand.
According to the Restaurant Association’s latest business survey, 43% of respondents reported lower revenue than the same period last year, while around two-thirds said their business was less profitable.
Not necessarily.
Prices for restaurant meals and ready-to-eat food increased by 3.1% in the year to June. That’s slightly higher than the hospitality industry’s overall sales growth of 2.9%.
In other words, some of the increase we’re seeing in hospitality sales is likely being driven by higher prices rather than customers buying more.
It’s another reason why a busier till doesn’t necessarily mean a healthier bottom line.
You can’t control the cost of ingredients, rent or power, but there are areas of your business where small changes can help protect already-tight margins.
Know where your margin is going. Keep a close eye on food costs and regularly review the profitability of individual menu items, rather than relying on overall sales. Your best-selling dish isn’t necessarily your most profitable one.
Reduce unnecessary food waste. Better stock rotation, portion control, ordering and using ingredients across multiple dishes can all help reduce the amount of food, and money, ending up in the bin.
Review your menu strategically. Rather than simply increasing every price, look at where costs have risen most, which dishes offer healthy margins and whether low-performing items are earning their place on the menu. A smaller, well-designed menu can also make purchasing and prep more efficient.
Make the most of quieter periods. Specials, events, set menus or targeted offers can help bring customers through the door when you’d otherwise have empty tables, without discounting during periods when people are already willing to pay full price. If your venue isn't on First Table already, it's something you may want to consider for filling seats at a discounted price during off-peak hours.
Look for efficiencies behind the scenes. When margins are tight, time matters too. Review repetitive admin and manual processes to see where technology, automation or simpler workflows could give managers and teams more time to focus on customers and running the venue.
There are some encouraging signs amongst all that pressure.
Cafés and restaurants continue to outperform the wider hospitality sector, accounting for around half of total hospitality sales in Q2.
Customers haven’t stopped dining out, but they’re becoming more considered about where and how often they spend their money.
That means value doesn’t necessarily have to mean being the cheapest. Great food, service and an experience people feel is worth spending their money on can be just as important as price.
For venues, the challenge is finding ways to protect margins behind the scenes without compromising the experience that keeps customers coming back.
While conditions might not feel easy just yet, the latest numbers suggest hospitality is moving in the right direction. It’s just going to take a little longer for that growth to start feeling like growth.
Read the latest hospitality sales update from the Restaurant Association here.