Dining out on a lift in spending

16:00, Mar 11 2014

People are spending more in cafes, bars and hotels, with some Wellington restaurants reporting trade is anything from "pretty busy" to "booming".

In February nationally, the total value of spending on credit and eftpos cards in the retail sector rose 0.9 per cent, mainly kicked along by higher spending on hospitality, furniture and appliances, Statistics NZ said. But people spent less on petrol after prices were cut earlier in the year.

February's overall lift was a rebound from a weak January, when electronic card spending fell a surprising 0.5 per cent, after a strong run late last year. For the year, electronic card spending was up 5.8 per cent. But the standout was the hospitality trade, with annual spending up 12 per cent nationally, buoyed by high consumer confidence, an improving job market, and higher house prices, economists said.

Wellington restaurants seem to be joining the party, with trade busy for the Ortega Fish Shack, and the waterfront's Shed 5 and its new casual-dining offshoot, The Crab Shack. The Museum Hotel and its French restaurant Hippopotamus are also seeing a lift, though some others in the high-end restaurant trade had struggled in the past couple of years, as some big firms moved out of Wellington.

"Business is booming, for us," Shed 5 functions manager Astrid Cottereau said. The business was refitted last year, splitting it into two restaurants under one roof.

"The Crab Shack has been going insanely crazy since it opened - and it still doing massive numbers nine months later," she said.


"Definitely confidence is up and we are busy, but we'd seen an improvement even before we closed for refurbishment."

The Crab Shack, with cheaper prices, had livened up the waterfront, and was "very popular".

People might not be spending more each time, but "they are dining out more frequently".

Museum Hotel owner Chris Parkin said year on year they were up slightly, but were overall "pretty busy" at this time of the year and it was hard to improve when they were already at 90 per cent full.

"It is hard to get busier," Parkin said of the 165-room hotel.

Its French restaurant Hippopotamus was definitely enjoying a lift in spending, after doing well in the past few years while other top eateries struggled in the wake of the global financial crisis.

"We managed to grow [the restaurant trade] over that period, but some of our competitors have felt it," Parkin said. There was a definite mood that wallets were opening more.

"Personally, I'd like to see the long corporate lunch, fuelled by magnums of good quality booze, come back into fashion. I can see that just around the corner."

A sign people were spending more was the restaurant selling more Louis Roederer champagne than anywhere else in New Zealand. "It's not bad," he said.

"I'm cautiously optimistic. Things are looking pretty OK," Parkin said, but he expected steady rather than strong growth.

Ortega Fish Shack manager Davey McDonald said trade was good, though it was always a busy time of the year.

"There's lots of good stuff on . . . the events drag people into town throughout February and March. We pack them all [events] into one period," McDonald said, including the rugby sevens and the New Zealand Festival.

"Maybe people can afford dinner and a show, rather than just a show," he said.

McDonald hoped that, with more positive talk this year, more people would think it was OK to go out and spend more.

But not all white-tablecloth restaurants have been doing well.

Martin Bosley's Yacht Club on the Wellington waterfront went into voluntary liquidation on February 4, owing almost $200,000 to trade creditors.

Deutsche Bank economists expected to see robust consumer spending in the first half of the year at least, in part fuelled by high rural incomes. But sales might cool in the second half as higher mortgage rates bite, with the Reserve Bank expected to lift official interest rates tomorrow.

ANZ said the trend in retail spending was more moderate than suggested by high consumer confidence, so with an interest rate tomorrow looking like a "done deal", spending restraint would help reduce the amount the central bank needed to raise rates.


Retail spending for February: Up 0.9 per cent (5.8 per cent for February year)

Hospitality (cafes, restaurants and hotels) up 1.5 per cent

Durables (furniture, hardware and appliances) up 1.3 per cent

Fuel down 1.8 per cent (after petrol price cuts)

Statistics NZ