A vegan café in Auckland has had to make the difficult decision to start serving meat on its menu as it battles with rising cost pressures.
The Restaurant Association's annual report into the state of the sector showed sales up 5.8% to nearly $16 billion. However, the number of outlets across the country only rose by 0.1%, with just 27 extra nationwide.
While sales are up, businesses across the country are still struggling, and some need to make difficult decisions to stay afloat.
Among them is Morningside's Kind Café, a mostly plant-based eatery that has made the decision to serve meat on its menu.
Manager Nigel Cottle told Breakfast the rising cost of doing business forced the decision.
"Pretty much every single cost that we've had has gone up over the past few years," he said.
"Whether it's rent, whether it's staff, whether it's food, just every part of the café business has gone up."
Cottle said the restaurant needed to raise its turnover by around 50%, which prompted the drastic decision.
He said 80% of the menu had been vegan, while 20% of its customers were vegan.
"We are now trying to be more inclusive, so about 30% of our menu will have some sort of meat products on it."
Cottle said the café had consulted with the vegan community and decided that products like line-caught fish and free-range organic chicken would be good additions to the menu.
"And talking to our vegan customers, they're much happier with us still being mostly vegan but still serving meat than closing our doors — which is the other option if we don't increase that turnover."
Cottle described a "steady decline" in customers while talking about the state of the hospitality business.
"We can just see that pressure is going on, and the spending patterns change.
"We might have a whole group of people come in, and last year, they would order off the menu; now, they'll order something from the cabinet, which is a bit cheaper.
"You still need a lot of staff for a café like that, but you just don't get the income that matches that increased staff pressure."
The decision was a "big philosophical change", but Cottle said, "Something has got to change in order for there to be survival going forward."
It's been a tough few years for the hospitality industry as a whole.
According to a recent survey by the Restaurant Association, 78% of businesses in Auckland and 76% across the country said revenue was "significantly worse" than last year.
A drop in patrons has also hit the industry hard, with 58% of Auckland businesses and 52% of businesses nationwide citing customer downturn as their biggest issue.
A large number of those businesses don't see things getting better. According to the survey, 42% of Auckland and 31% of businesses nationwide believed conditions would "deteriorate" over the next year.
The survey also suggested mental health had "worsened" in the industry, with 66% of businesses in Auckland and 54% nationwide saying it has worsened "as a result of these ongoing pressures".
"The recent closures in our industry exemplify the harsh reality many businesses are facing," Restaurant Association chief executive Marisa Bidois said.
"Many of these establishments serve as cornerstones of our community, hosting countless special occasions and launching the careers of many in our industry," Bidois said.
"These closures serve as stark reminders of the challenges currently confronting the hospitality sector."
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