Tough times bite restaurateurs

Costs too high, customers too few

BEN HEATHER AND ELLE HUNT
Last updated 10:54 17/12/2012
Gusto Bistro co-owner Duncan McKenna
CLOSING TIME: Gusto Bistro co-owner Duncan McKenna is shutting up shop because his business can’t survive.

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A slew of Wellington restaurants are shutting their doors as the effects of rising costs and tight-fisted customers are increasingly starting to bite.

Petone's Gusto Bistro is the latest in a string of eateries to close, with the owner blaming "not enough bums on seats".

Caribbean Coffee House, which owns the Caribbean Restaurant Bar and Grill in Cuba St, was placed into voluntary administration last week but is still trading. Both the former owner and administrator BWA Insolvency declined to comment until after a creditors' meeting on Thursday. Caribbean Coffee Roasters, which owns Cafe Caribe and a roasting business in Brooklyn, is unaffected.

Restaurateurs say the rising cost of food, rent and insurance is punishing profits at a time when customers are reluctant to spend.

Public sector job cuts had also hit the lunchtime crowds, some said, while others claimed there were simply too many restaurants in the city.

Gusto will close its doors on Sunday. Co-owner Duncan McKenna said he had called it quits because he could not see any signs of impending improvement.

"I couldn't see next year getting any better, probably worse," he said. "It has just been getting tighter every year."

He worked long hours at the bistro six days a week, but could not continue to squeeze out a profit as costs - particularly of food - rose. "I am earning not much more than I would if I was on the dole."

Steven Scheckter, of Petone delicatessen On Trays, which supplied Gusto, said his trade with restaurants had decreased by between 15 and 20 per cent in the past year.

Continuing financial uncertainty meant many customers were ordering day to day, he said. "They don't have that confidence that they'll have feet through the door every evening."

Restaurateur Mike Marsland closed Ernesto Cafe in Cuba St last year because of a conflict with his landlord over earthquake strengthening.

His new restaurant, El Matador, is also in Cuba St and his rent bill has dropped from $100,000 to $33,000.

Mr Marsland said El Matador's day trade was "really average", in keeping with the rest of the industry. Some had described the past winter as the worst in 20 years.

"It's just bloody hard work out there at the moment - a vicious cycle of not enough money, not enough people."

Maryline Raynal and Sebastien Jacquet closed their French restaurant Le Metropolitain in Cuba St in September after a big rent hike and are now planning to return to France.

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Ms Raynal said they had tried to find new premises in Wellington but could not afford to rent or buy.

"It is getting tougher. I think there are too many restaurants in Wellington."

Last week Willis St's Cadillac Diner also closed, after bad reviews and high rents left the owners of the 1950s American-style restaurant with an overdue rent bill of $4000.

Top chef Martin Bosley said many people treated opening a restaurant almost like a hobby. Earlier this year, Mr Bosley almost closed his waterfront restaurant in Oriental Pde after a particularly lean winter, surviving only with the help of suppliers.

"The next six months will be really telling but I think there is a change [for the better] in the air." Restaurant Association of New Zealand president Mike Egan claimed the string of closures was not unusual.

While customers' reluctance to spend, coupled with rent hikes, had affected some restaurants, particularly at the high end, there was still strong demand, he said.

Trade figures also support a more optimistic outlook, with spending on cafes and restaurants reasonably steady in Wellington for the past three years.

There are 569 cafes and restaurants in the city, with the number staying fairly steady over the past few years.

- The Dominion Post

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