17. Hospitality in 2025 - Survive Now, Thrive Later

Cost control, customer experience and finding new income streams

1. Introduction

Few industries have felt the economic squeeze quite like hospitality. In 2025, rising wages, ingredient costs and reduced discretionary spending are combining to test cafes, restaurants and accommodation providers across Aotearoa.

This article continues Pillar 5 - Sector Spotlights, offering grounded, sector-specific advice. For hospitality operators, survival is about more than cutting costs. It’s about holding onto service standards, keeping morale up and seeking small, smart ways to diversify without overextending.

2. Representative Narrative

Talia co-owns a neighbourhood café in Dunedin. Known for its brunch menu and local art on the walls, it once hummed with queues out the door. Now, customers are visiting less often and spending less when they do. Her wage bill has increased, supplier prices keep shifting and margins are paper-thin.

She and her partner were at odds - one wanted to scale back hours, the other to invest in a new offering. Unsure of the next step, Talia booked time with John Luxton from RegenerationHQ, whom she’d heard speak at a regional food and beverage forum.

John didn’t offer a silver bullet. Instead, he helped them name what they stood for - quality, warmth, community and asked one simple question - “What can we protect and what can we reimagine?”

3. Recommended Actions

• Audit your menu with margins in mind
  Remove or reprice low-margin items. Design specials around seasonal ingredients and supplier relationships.

• Streamline staff rosters
  Track foot traffic and align shifts to actual demand. Use prep sheets, cross-training and tight open–close protocols to keep things efficient.

• Enhance experience without extra cost
  Music, lighting, welcome rituals and follow-up notes can boost the perceived value of each visit.

• Test small add-ons or new income streams
  Think - catering, after-hours bookings, pre-order packs, private hire, or pop-ups. Trial one idea at a time.

• Keep communication personal
  Thank returning guests. Share a little of your story. Invite feedback. These small acts increase loyalty more than loyalty cards ever will.

4. Expected Outcomes as Narrative

Talia and her partner ran a week-long review of their menu costs, identifying five popular dishes that had quietly turned unprofitable. They removed two, adapted three and created a set lunch menu that used shared ingredients across multiple plates.

They also launched a monthly “long table dinner” - a ticketed evening event featuring local musicians and a fixed menu. It sold out in two days and brought in double the average weekday takings.

The café didn’t magically return to pre-pandemic volumes, but it felt alive again. “We stopped waiting for busy days,” said Talia. “We created moments worth showing up for.”

5. Red Flags & Mitigating Strategies

Red Flag 1 - Keeping a wide menu out of fear of losing customers
Mitigation - Focus on your bestsellers and simplify the rest

Red Flag 2 - Overworking yourself to avoid tough staffing decisions
Mitigation - Use real data to shape rosters — not guilt or assumptions

Red Flag 3 - Starting big new projects without capacity
Mitigation - Trial small and validate before committing

6. HR Best Practice

Hospitality staff often carry emotional load — rushed service, long hours, customer expectations. In lean times, they also absorb stress from the owners.

• Keep morale up through small recognitions and steady leadership

• Involve the team in decisions - they often see what customers respond to

• Train for flexibility - float roles, upskilling and shared responsibilities

• Create boundaries - no one works well on burnout

 John often reminds owners, “A tired team delivers tired service. Protect your energy and theirs.”

7. Psychological Perspective

In hospitality, identity and business are often woven tightly together. When takings drop or regulars disappear, it can feel deeply personal. But the truth is, markets shift, your value doesn’t vanish.

Forgiveness, flexibility and focus are needed. Forgive yourself for past overstocking or pricing mistakes. Stay flexible with ideas. Focus on what still works and build from there.

8. Recommended Owner's Mindset

Lead with calm creativity. The storm may not pass soon, but you can find new ways to navigate. Reinvention doesn’t mean reinvention of everything - just the parts that are holding you back.

9. Reflective Questions for the Owner

• Which dishes or services bring in strong margin and which quietly cost me?

• What parts of our experience feel good - not just functional?

• Is my team engaged - or exhausted?

• What small trial could we run next month to explore a new income stream?

• Am I proud of what we’re offering right now and if not, what needs to change?

10. Suggested Ongoing Actions

• Review your menu with a food cost spreadsheet every month

• Track labour-to-revenue ratios weekly - adjust rosters accordingly

• Brainstorm one small-scale event or offer each quarter

• Keep a customer feedback board or log - include compliments

• Schedule quarterly coaching with someone like John Luxton to reflect on what’s working and where to adjust

Critical Takeaway - Hospitality isn’t just about staying open - it’s about staying connected, creative and clear on what makes people come back.

If you’d like a confidential, free of charge, free of obligation conversation about your business, here’s how to get me.

📞 Phone +64 275 665 682
✉️ Email john.luxton@regenerationhq.co.nz
🌐 Contact Form www.regenerationhq.co.nz/contact

If you’d like to read more RegenerationHQ thinking on SME business and other things, go here – www.regenerationhq.co.nz/articlesoverview

🔹 RegenerationHQ Ltd - Business Problems Solved Sensibly.
Supporting NZ SME Owners to Exit Well, Lead Better and Build Business Value.