The need for hospitality businesses to keep evolving

The need for hospitality businesses to keep evolving

Retail – Workplace June 2019

Smarter solutions

Recent news out of the UK documenting the collapse of celebrity chef Jamie Oliver’s restaurant empire carries some pertinent messages for the New Zealand hospitality scene.

Oliver is a force to be reckoned with in the food arena – with fingers in many foodie pies from publishing to television shows, homewares to advocacy.

But industry commentators in the UK say warning signs went unheeded where his restaurant businesses were concerned and now 1,000 people are out of a job.

Yorkshire lawyer and hospitality industry expert Simon Mydlowski, said Jamie's is the latest brand that has failed to keep pace in a rapidly changing sector where a business needs to keep evolving.

"Suppliers will have been caught unawares here, perhaps showing a little too much trust in the Jamie Oliver name, but this is not the first big restaurant chain to have suffered and it won't be the last," he said in a statement.

"Faced with higher rents, rising food prices and increased competition, restaurants need a point of difference — it's no coincidence that smaller brands with the freedom and flexibility to keep things fresh are currently the ones performing well."

And therein lies the challenge for New Zealand restaurants and hospitality-related businesses.

The dining public is a fickle bunch and when you throw in disruptors such as the impact of social media, home delivered food options, the emergence of “ghost kitchens” and dietary fads and trends – a hospitality business could be understandably confused about direction and target market.

According to the Restaurant Association of New Zealand’s most recent annual state of the industry report, 2,739 new hospitality businesses opened in 2017, the equivalent of seven a day.

That was offset by businesses closing, but 530 more outlets opened their doors for the first time than shut them for good in 2017, according to Hospitality Association figures.

Industry sources say an average hospitality outlet in New Zealand lasts just three years which represents significant churn.

Some of the key reasons a hospo’ business might fold include:

·overspending on fit-out

·lack of equity at start-up

·underestimating compliance requirements

·problems with lines of credit

A lack of skilled staff remains the industry’s biggest challenge and this has been compounded by the influx of new outlets.

The hospitality industry employs 130,000 people in New Zealand. With wage rises, escalating rents, rising food costs and increased competition all playing a part, margins for business owners are tight.

The key learnings that seem to have come out of Jamie Oliver’s fall from restaurant grace are that the sector must evolve and not take growth for granted, clear business strategies should be put in place and regularly revisited/benchmarked and never underestimate the dining public who will vote with their feet – and stomachs.

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