Latest / Early Edition with Ryan Bridge / Brad Jacobs: Coffee Club Director on cafes continuing to see the profits squeezed

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Brad Jacobs: Coffee Club Director on cafes continuing to see the profits squeezed · Early Edition with Ryan Bridge

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  Speaker 1: Let's go to hospitality. The sectors hit record sales of
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  Speaker 1: fifteen point nine billion dollars. Restaurant Association and your report
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  Speaker 1: out takeaways with a big winners up three point two
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  Speaker 1: percent to four point four billion. Cafes and restaurants barely
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  Speaker 1: moved up up zero point three percent to seven point
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  Speaker 1: eight billion. International visitor spending up nine point two percent,
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  Speaker 1: now sitting at eighty six percent of pre COVID levels.
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  Speaker 1: But revenue doesn't mean profit. Brad Jacobs is Franchise New
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  Speaker 1: Zealand chairperson and coffee club co owner with me this morning. Brad,
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  Speaker 1: Good morning, morning Ryan, so good, thank you, good to
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  Speaker 1: have you on the show. So revenue is are but
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  Speaker 1: costs are up too.
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  Speaker 2: Yeah, yeah, absolutely, I guess. You know, a big headline
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  Speaker 2: number is nice and it's good to celebrate anywhere, I guess.
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  Speaker 2: But yeah, when you think about food inflation at nearly
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  Speaker 2: five percent general and inflation at two point seven percent now,
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  Speaker 2: and of course you're also got to remember that there
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  Speaker 2: was about two point three percent more outlets opened across
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  Speaker 2: the country, So one point four percent todal growth is really,
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  Speaker 2: unfortunately just not enough to keep people, to keep people
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  Speaker 2: where they need to be.
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  Speaker 1: What about wages? Labor costs are forty percent of businesses.
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  Speaker 1: Now that's the highest diva. Is that, you know, an
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  Speaker 1: increase in the minimum wage having an effect? Or is
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  Speaker 1: that a lack of skilled staff and you're having to
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  Speaker 1: pay more?
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  Speaker 2: What's the story? Yeah, interesting, not in this report, but
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  Speaker 2: I did see another report a couple of months ago,
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  Speaker 2: and it was about the price of coffee versus labor
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  Speaker 2: over the last ten years, and essentially the price of
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  Speaker 2: coffee had gone up something like about twenty two percent
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  Speaker 2: and ten years versus the minimum wage has gone up
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  Speaker 2: sixty three percent over the last ten years. So you know,
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  Speaker 2: the reality is I just we can't pass on pricing
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  Speaker 2: that we need to to customers without running the risk
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  Speaker 2: of putting ourselves out of market. So unfortunately, yes, minimum
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  Speaker 2: wages has just grown faster than we can pass on
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  Speaker 2: a cost, and we've had to absorb a lot. I
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  Speaker 2: think there is still some shortage of labor. Not as
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  Speaker 2: bad as it was certainly for us a couple of
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  Speaker 2: years ago, eighteen months ago, it was a major problem
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  Speaker 2: for everyone. It has relaxed a little, but I guess
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  Speaker 2: once those those you know in that type period where
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  Speaker 2: where labor costs grew quickly, you don't then come back
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  Speaker 2: down from that. That's the new level then, So.
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  Speaker 1: How can we still have problems with labor shortages when
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  Speaker 1: we've got all these people on job seeker you know what,
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  Speaker 1: what's not computing?
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  Speaker 2: Yes, maybe some of it is the wrong people in
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  Speaker 2: the wrong area. Maybe there's a few people that just
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  Speaker 2: don't actually want to be employed. And of course it
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  Speaker 2: is you know, I suppose it's it's a term that
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  Speaker 2: gets thrown around regularly, but perhaps there's jobs out there
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  Speaker 2: that qws just don't want to do that they see
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  Speaker 2: that that they're above. So without without people on some
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  Speaker 2: kind of eVisa, our industry falls apart. That's the reality
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  Speaker 2: of it. You know, we have a lot of people
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  Speaker 2: working in hospitality that are either here, studying, traveling new
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  Speaker 2: to New Zealand and that has been as the same
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  Speaker 2: for our business as long as I can ever remember.
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  Speaker 1: Bred Is there still a problem with working from home?
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  Speaker 1: Is that still affecting business? I saw ACC this week
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  Speaker 1: went from two days in the office to three.
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  Speaker 2: Is there? Yeah, it's still a problem. Absolutely. Yeah. If
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  Speaker 2: you look at the report, you know, if you look
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  Speaker 2: at Auckland, it performed below below the national average. And
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  Speaker 2: then when you read further into the report, it says,
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  Speaker 2: you know, of that one point two percent growth in Auckland,
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  Speaker 2: most of it came from the suburban areas, not the CBD.
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  Speaker 2: We still have four outlets in the city we had
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  Speaker 2: we had six previously, and all four of those outlets
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  Speaker 2: have never got back to anywhere near close to what
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  Speaker 2: they used to be pre COVID. Unfortunately, this is Auckland city,
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  Speaker 2: and yeah, the reality is it's just not as many
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  Speaker 2: people in offices as there used to be, and that
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  Speaker 2: part of that, I guess is working from home. I
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  Speaker 2: think part of it is also, you know, some businesses
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  Speaker 2: found that they just didn't need to be in the
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  Speaker 2: city and so you see little subtle areas growing in Auckland,
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  Speaker 2: people that are not needing to be right in the
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  Speaker 2: city center anymore. The prestige of being in the city
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  Speaker 2: center just isn't there.
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  Speaker 1: Bread appreciate your time this morning. Thank you. Brad Jacob's
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  Speaker 1: franchise and he'szell On chairperson and.
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  Speaker 2: For more from early edition with Ryan Bridge.
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  Speaker 1: Listen live to news Talks it'd be from five am weekdays,
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  Speaker 1: or follow the podcast on iHeartRadio.