Good service has labour costs
Labour costs have been pegged as the biggest challenge facing Manawatu hospitality operators.
The fourth annual hospitality report by the Restaurant Association of New Zealand found 83 per cent of those surveyed thought their biggest concern for hospitality operators in the region this year was paying staff.
Association chief executive Marisa Bidois said: "Wages continue to rise beyond customers' expectation of price rises and that's the challenge and balancing act that business owners must face.
"At the same time, the industry's No 3 challenge is a lack of skilled employees, which can place upward pressure on remuneration. That's why building and maintaining sales volume is the second most pressing challenge."
Manawatu Restaurant Association president Sean Kereama said the only thing that could be done to lighten the load of labour costs was to increase productivity.
"If people are worth it, then you should pay appropriately.
"We need to be clever about what we do.
"It comes down to getting the right people in the right positions and getting that productivity right."
Hospitality New Zealand regional manager Chris Hince said people needed to recognise the value of hospitality and the value of labour.
"Without labour you've got a bag of groceries and a table - which isn't why people go out."
He said public perception needed to change where people focused on the value of the service rather than just price.
"It's about experiences; people can't expect to pay supermarket prices for that experience."
He said the industry also needed to recognise that in their business they should not be competing on price. It could lead to businesses undervaluing their own product.
Sales per employee for the region were higher than the national average, jumping from $358 million in 2013 to $399m this year.
But 83 per cent of operators said business profitability had not improved in 2013 compared to 2012.
Hince said that lack of profitability could be linked to the increase in the cost of basic goods.
"It's something that doesn't always get passed on to the end user. It's something that we tend to absorb, which can affect profitability."
The region had a large sales performance increase in 2014, recording 11.5 per cent growth.
The report stated that the Manawatu-Whanganui region struggled in recent years with a decline in sales of 3.3 per cent from 2011 to 2012 and a further decrease of 3.6 per cent from 2012 to 2013.
The number of outlets has also been slowly reducing over the past five years, although the region is expected to report a small increase in outlets next year.
The spend per capita- $1540 per person - is only slightly below the national average of $1600.
The revenue share per outlet for the Manawatu-Whanganui region is expected to grow significantly in 2014 and 2015.