Why Hospitality Needs More Than A Reset

by | Jun 25, 2021 | Opinion

Wellington-based David Neville is a professional chef, food photographer, documentary writer; content creator and author behind the firebrand social media account Eatingat3am. It’s via that account he’s been offering some pushback and perspective to the Restaurant Association’s petition for a hospitality reset. Tash McGill interviewed David to dig into more of that perspective and conversation. 

Tash: David, you’ve been one of a few people who’s been eloquent, but outspoken in offering a sort of a rebuttal to the petition that the Restaurant Association has put forward. And I’m interested to know from your perspective, why is it necessary to offer some alternative perspective to that petition and what do you see as its major faults and flaws?

David: Yeah, that’s like, it’s such an easy question to say out loud, and it’s such a big question to answer there. You know, I’m not really against the Restaurant Association per se. You know, they do a lot of great work but it’s more of a sign of the times of where restauranteurs are at in this minute – that they are bleeding. You know, they’re dying a death of a thousand cuts – they need boots on the ground, and they just need solutions today, not tomorrow. But a lot of these problems that we’re experiencing in hospitality, these are not new problems. They’ve been here for a decade and it’s just COVID has now made us have to deal with it. And really, I think the petition as a whole kind of was to help the industry and highlight where consumer dining today is and where expectation is today that we just don’t have enough boots on the ground to keep up with that demand.

You know, it’s the expectation is just getting higher and higher and higher. But I think what really is not sitting so comfortable with some members of the public that I’ve talked to and a lot of members within the industry is that no one is denying that we haven’t been recruiting the numbers. We need to keep these operations functional, but it was also the demand there. If we allow students to work full time – and I work with students – you know, some of these kids are already sitting four or five papers on a university degree that they’re paying upwards of $50,000 for. They just don’t see it (hospitality) in their lives. They’re thinking ‘how am I going to work full time on top of all of this as well?’. There are people from the immigrant community who’ve been working on permanent residency here in New Zealand for, at times four or five years, and having relationships with employers that they’re now beginning to get letters saying that this is not going to be continued. They’re not extending it anymore for them. And now that there was this mention of a salary cap that capping their wages at $25, actually reneging the minimum rise to $27 per hour, that for them is just a case of Australia’s just paying better. America’s paying better. Canada’s paying better. New Zealand’s offer is just not competitive to what other places in the world are offering.  New Zealand is a very long flight and it’s not a cheap one either. So if you were the immigrant, you’ve really got to kind of weigh up, okay, I’m going to a country of where I know there’s a chance I might not earn over this amount per hour, whereas a shorter distance away is Australia where some employers, not all of them, but are offering to help me pay the cost to get there.

They’re offering to help accommodate when I get there, they’re offering to assist me in other ways. And in that sense, you know, this petition was a little bit myopic. It was a little bit more focused on what the restauranteur needs and really, you know, what people don’t understand for the restaurant is that their day-to-day costs are skyrocketing as well, their fees, their leases, all of that, their commodity prices are all skyrocketing as well. And really what they’re asking for is “I just need a cost in my life that I can guarantee what their cost is. I know what it’s going to be by the end of the month. I know what it’s going to be six months from now. I can treat it as predictable.” And you know, you can’t blame them for that. I have a sympathy for them, but at the same time, you can’t also deny the statement that a business with no staff was just an empty building.

Tash: I think the observation that it is a very employer centric is telling, it’s easy to see where there are shortcomings in terms of the provision. There’s no provision for longevity but it seems to me there’s an opportunity to either fix what’s wrong right now, or try and take the opportunity to fix the bigger problem that actually has spun up these circumstances. Why do you think we’ve landed in this type of position in the hospitality industry in New Zealand?

David: Yeah, again, there’s so many facets to the answer on this one that. You know, the first one is that for a long time in New Zealand, we put a very strong premium on that a university education was the way forward. And the last couple of years, particularly the last year, you can even see it on television that there’s now these commercials about, you know, the family’s son or daughter going into the trades, the parents being slightly worried, but the child’s actually okay. And, you know, New Zealand took the initiative by offering free apprenticeships for post-COVID environment recovery. But, hospitality is the third largest revenue generator for New Zealand, but nothing related to the hospitality or tourism industry was added to that apprenticeships list.

Now I’m very on board with training facilities. But you can only study cooking in a classroom so much before you’ve got to be hands-on – you can’t learn to cook by reading from a book. There’s got to be a practical application here somewhere. So we weren’t actually really trying to create an entry point, which was feasible for young people to enter into the industry. Instead, there was this diploma program where you could go for two, three years, rivalling the cost of a university education and some people are paying like $28,000 -$30,000 to do this. And it wasn’t actually the best way to induct them into the industry.

The next side of it is there, you know, there’s a reason it’s called a housing crisis for a reason. And just the cost of living in the last five years has shot up so much and that’s the same for the worker as much as what it is for the employer. It just keeps going up, up, up, up, up, and wages are really beginning to struggle to catch up with it.

So what do you mean to say to someone when they’re looking at potentially anywhere from a 15 to 20% house deposit and a house is $1-1.2, 1.3 million to be somewhere that is considered reasonably suitable. You know, this is a 30 year mortgage that we’re looking at. And interest rates that have never been lower, which are only going to go up there – how do you resolve that financial crunch? Because, you know, 20 years ago, 10 years ago, you know, for different generations, they were prepared to put their hand inside the raw chicken because at the end of the day, they knew with hard work they could still afford a certain amount of creature comforts in life.

Now we’re kind of asking the employees of tomorrow to do that, but they know from the get-go, this is not going to get me on any financial ladder. And so that’s the second part of it there, you can’t blame restaurants for this, but they have to deal with it the same as every other industry has to deal with it.

Yeah, it’s always hard to look 10 years into the future and know what it looks like. It’s much easier to look 10 years back to what it was. The generation that is coming through, it’s easy to say they don’t have the same work ethic and they don’t have the same determination and all of that, but really, it’s just that this is the change between this generation and the next.

A lot of Generation Y when you actually sit down and talk to them, part of their culture is that they really feel that by age 25, they’ve got to have something that is successful and working for them, or someone’s going to come murder them in their sleep. Like this is a real fear on their part, and they’re kind of not half wrong. Like I said, if you’re needing, $ 170- 200,000 in a house deposit by age 30, just so you can sign onto a 30 year mortgage, they’re kind of not quite wrong about it either. You know? So yeah, these are, these are the challenges or the modern workplace, not just hospitality, but you know, all workplaces because you’re going to hear it in all of them.

Tash: You mentioned previously, over-saturation. I’m not sure when the shift happened – this idea that there will always be a market for whatever the concept is that people want to open. Even through COVID, one of the conversations around Auckland, Wellington and Christchurch was the idea that COVID may have in fact, are provided an opportunity for a bit of a reset, for some of the venues that weren’t able to make it. That by closing, as sad as it is – it might actually provide a little relief for an oversaturated market. That hasn’t really happened. But I’m curious to know what you think about that over-saturation –  is it a real problem? What are the ways that we might solve it? Why are new venues continuing to open in the midst of a crisis, rising rent prices. It seems like the costs and the risk of opening restaurants, opening venues continues to rise and continues to increase. So why are so many people continuing to do it?

David: Different people will have different motivations, obviously. So in answering this question, it will vary depending upon the vendor. The one thing that we need to kind of understand is that we live in a world of economics. Now, a lot of people think about economics is to do with money and so forth that it’s actually to do with scarcity of resource. So there’s a high demand for worker at the moment, and there’s a low supply. So you’d expect the prices to go up for the worker, but that XY axis is existing within a much bigger X/Y axis, which is the saturation of the market. That if I go to a restaurant and they’re fully booked, I’m only ever 30 seconds away from another restaurant. And if I go to that restaurant and they say, we’ve got a table, but it’s by the bathroom. And so I don’t like it. Well, I’m only ever a minute away from another restaurant and you can particularly see this in the coffee scene. There there’s so many cafes and there’s so many like little holes on the walls that you can get a cup of coffee there. It’s just become hyper competitive, you know, but to answer the bigger question, why do people keep opening restaurants? Well, for some of them, they are the sole operator. And this is their dream. There are a lot of these builds that were under development, they’d already signed the dotted line, and  COVID came along and you can’t get your money back now. You’ve just got to roll with it.

But, you know, to their credit, they’re trying to make the best of a bad situation, but there’s also various levels of investment groups. There are some that keep a tight portfolio, they kind of entertain restaurants, they have a very high offering and they grow very slowly and moderately. They have a good understanding of the industry, but there’s also other portfolios out there that this is restaurant number #45 and everything is kind of a little bit more cookie cutter and a little bit more stained. Like, this is our sports bar and this is a kind of Mexican Cantina offeringNothing per se is bad, but nothing per se is great. And this is a numbers game for them there. If we just make a thousand dollars off of each of them and we’ve got 45 of them, well, you know, the numbers are building up for us now. Are they passionate about this? Well, they’re definitely passionate about the income. Absolutely. But was this their lifelong dream? You know, I don’t know so much. And there’s also this whole thing about it exactly mirroring the housing market there. I brought this house and really what I’m aiming for here is the capital gain. But while I’ve got the house, I might as well have tenants in it. So that way it’s making a low-hanging fruit income straight away, you know, it just makes sense. They’re not looking at this as, this is my family home. And I hope to one day, you know, as a legacy, give this to my children and build memories and stuff.

And so to the public, they can’t really tell which is which because restaurants more or less look alike. That’s where it really kind of sucks for the solo-preneur for whom this was their dream and this highly successful independent restaurant it’s actually built off the back of two or three other restaurants they’ve owned before this, where they earned their hard lessons learned. Now they find themselves in this environment where they’re just having to compete with people who view it like as long as we’ve made X amount of money by this date, if we close it, it doesn’t matter because we’ve already got out of it. What we put into it, plus the return we were looking for.

It’s a big leap going from sous chef to head chef. It’s an even bigger leap going from headship to owner because the things you need to be aware of and the things you need to stay on top of are endless and nameless. It used to be having boots on the ground was good. You know, if you went to Big Al’s, you could meet Big Al, but now they need eyes in the sky as well, because there’s always a million little fires that need to be prevented before they happen or stamped out immediately once they’ve happened, you know? So they’re becoming more and more demanding. And a lot of people are getting into this, not actually realising the full size and scope of the demands that they’re going to have to deal with once those doors open.

Tash: Where does the responsibility for problem solving lie? Do you think, I mean, is it, is it actually a council problem where councils are issuing licenses and allowing people to create venues through the consent process where actually they should steam the flow? Is that a consumer problem – do consumers need to start being a little bit more discerning or conscientious? Or is it simply a, a cultural phenomenon now? That’s here to stay.

David: Oh God, that’s a great question there. You know, like I believe in the spirit of the living man, that if your dream is to own a restaurant, then I don’t want to inhibit you from trying to do that. But at the same time, councils make a certain amount of income off of a number of different things. When you go to open a restaurant, okay, here’s your application fee for filing it. Now we come and speak to your premises. That’s another fee. You want to sell food here? Oh, well you need to have a food control plan and food standards. That’s another fee. You’re also going to need managers licenses. That’s another fee. Oh, hold on, wait a minute. You’ve got a wood, like a wood-fired oven in here. Oh, well now we’ve got to do a clean air analysis. That’s another fee.

So I think realistically operators at this point in time would probably greatly appreciate – can we slow down this flow? Maybe not forever but just in the short run. And we can just see how this is not gonna end well, and the problem is snowballing and if the industry is requiring 26,000 urgent workers immediately, while at the same time, we’re still rubber stamping new venues? Yep. New restaurant, new restaurant, new restaurant, you know, it’s only going to put more and more pressure on everybody who’s already in the market. So I would say councils have a responsibility to a degree at this point, especially in terms of like city planning, asking for due diligence would probably go a very long way there. We’ve totally hit our saturation there because now all we’re doing is preventing other businesses from using the space.

And, you know, for a lot of like big restaurants, particularly in the major city centres in New Zealand, a 300 square meter restaurant is like $60,000 a month. And that’s just to open the doors and turn the lights on and have stuff going. We’re not paying staff or buying product or anything here at the moment. And, you know, that’s, that’s a lot of hamburgers you got to sell every month to just keep the doors open while you’re watching X, Y, Z down the road opening more and more and more restaurants.

It’s just like this pie is getting cut into such a tiny slice. You know, it’s just becoming harder and harder for them. I don’t want to say like no more restaurants – but I would say having a partial moratorium and just being a little bit more thoughtful about resource scarcity. We can tell you right now, if you’re going to be opening here, your dream could very well be a nightmare and you’d be better served to find other ways.

But at the same time, the dining public, they don’t understand the margins and the effort that’s going on behind the scenes here. And to be honest, it’s not their job to understand that, it’s our job to understand. But I think they’re going to have to take a little bit of a deep breath and understand, in the next couple of years, something you were paying $42 for that is going to go to $60. There’s just no way around this. And then there is going to be a couple of years here at minimum, that hospitality is going to need to rebuild itself, getting those professionals back, who can see a lifelong career here and how they can develop and move and have new horizons.

But what the customer can look forward to is they are going to get back to those days, a more personalised and a much more professional product. The sign of the times today is when I say to people ‘what’s house wine?’.

And they think of it as the cheapest thing on the wine list. But 20- 25 years ago, house wine was something that the sommelier would blend in-house for your table for your food. That house wine was a very distinctive thing, you know, and it showed a real knowledge of the product you’re working with and they would talk you through it. They’d say, you’re having the beef, but you’re having the lamb. So I’m blending this with that. And I think it’s going to match your meals this way and that way. And yeah, it was an extraordinary service.

Tash: Is there a possibility that part of the culture change part of the consumer shift as well as the broader hospitality industry shift could actually may be made possible or be supported by this more open-ended conversation and interaction with consumers and hospitality workers?

David: Yeah. I’m fully on board. I am fully on board. Yeah. Like I said, this, this layer cake has got so many layers. I’m just one voice in it, but really there’s, you know, at least two dozen other voices that offer their own perspective that are equally as valid, you know, it’s, that’s what I mean. It’s kind of got to this level that it’s so faceted. Now it’s going to take more than just one mind and more than just one solution, you know.


About the Author

Tash McGill

Tash McGill works as a strategy consultant in tourism, hospitality and digital transformation. She is co-founder of The Feed, President of Food Writers NZ, Chair of the New Zealand Whisky Association.

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