Chinese restaurant owners in Auckland facing slump worse than Covid

Auckland’s CBD has been grappling with a downturn in recent years that has emerged in a maelstrom of factors relating to the construction of the City Rail Link, lingering impact of Covid, dwindling foot traffic, rising crime rates and a sluggish economy.

To attract more visitors to the city center, Heart of the City is currently in the middle of a month-long food campaign aimed at revitalizing the hospitality sector.

Yet some Chinese restaurant owners in the CBD say that turning a profit is now worse than it had been during Covid.

The business association of Auckland’s city centre said sales and foot traffic in the June quarter had declined year on year, with overall spending down 13% in the month of June alone.

Yue Zhang, owner of Biang Biang, said patronage at his restaurant had dropped by at least 30 percent in the past six months compared to the same period last year.

“At this stage, running a restaurant in Auckland’s CBD isn’t about making a profit – it’s about survival,” he said.

Zhang opened his Xi’an-style restaurant on Queen St in 2021.

The business struggled initially as the protracted lockdown in response to the surge in Covid cases changed dining behaviour in the central city.

But Biang Biang managed to keep afloat thanks to the government’s wage subsidy scheme and rent relief offered by his landlord.

Yue Zhang, owner of Biang Biang, says orders have dropped by at least 30 percent over the past six months compared to the same period last year.
Photo: RNZ / Duoya Lu

In recent months, however, the restaurant has been hit by a second wave of economic stagnation, forcing Zhang to reduce profit margins.

“The rise in mortgage rates has affected people’s spending,” he said. “They simply don’t have extra money in their pockets. Customers are extremely price sensitive.”

Zhang said restaurants in the CBD were simply doing everything they could to survive.

“This year’s economic environment is even worse,” he said. “We’re doing our best to keep profit margins low while still maintaining the quality and affordability of our dishes.”

Zhang said office workers and students were his principal customers.

He said restaurant sales had also been affected by a lack of free parking in the city centre as well as concerns over public safety.

Yun Li, owner of Chamate and Potstickers on Swanson St, said sales at both establishments had continued to worsen despite the worst of the pandemic being over.

“Although customers couldn’t dine at the restaurants [during lockdown], we saved on labor costs and our takeaway business was particularly strong,” Li said. “The cost of rent dropped, so we were able to hold on.

“But after mortgage rates exceeded 6 percent for home buyers, customers have watched their spending very carefully.”

The outlook for restaurants in the CBD looked dire, she said.

“We’ve seen two customers order a set meal for $16.80 or $17.80 and then split contributions when paying the bill,” she said. “This happens frequently now. It never happened before.”

The owner of Chinese restaurant Potstickers has been forced to squeeze profit margins to survive.
Photo: RNZ / Duoya Lu

Li said changes in work habits and the decline in the number of international students have also reduced foot traffic in front of the restaurant.

“After the pandemic, everyone started sticking to working from home, only coming into the CBD two days a week,” she said. “That’s still the case now.”

Takeaway sales had been impacted the most, she said.

“It’s 70 percent lower than during the pandemic,” Li said.

“Back then, no one was going out and international students were stuck here in New Zealand. After the pandemic, the number of international students has significantly decreased.”

Li said the combination of declining sales and rising operating costs were squeezing profit margins.

“Running a restaurant isn’t about making a profit anymore, it’s about being able to cover wages, rent, taxes and suppliers,” she said.

“This isn’t a time to make money, it’s a time to survive,” she said. “The best we can hope for is that everyone makes it through.”

Award-winning restaurant owner Krishna Botica says restaurants in the CBD are facing greater uncertainty than they did prior to Covid’s arrival in New Zealand.

Botica opened Ghost Street, a Chinese restaurant named after Beijing’s iconic food boulevard, as the pandemic spread in 2021.

Her first decision was one of the hardest – whether to stick with the name of the restaurant she had planned to open ahead of the pandemic.

“We had a fight over the [restaurant’s] name – Ghost Street – because we were concerned that people would view it negatively … at a time when so many were dying around the world,” she said.

“After talking about it for six months or so, we decided to keep the name because it aligns with what we are trying to achieve.”

The kitchen at Ghost Street, a Chinese restaurant named after Beijing’s renowned food boulevard.
Photo: Supplied

The first year of business was particularly tough, Botica said.

“The restaurant was probably closed longer than it was open,” she said. “You need to build brand awareness in the first year, but everyone forgot about the restaurant [during Covid].”

Patronage had not improved since the Covid restrictions were lifted by the government in September 2022.

“The challenge now is trying to predict where our revenue is going to sit in the coming month or in the coming week and managing costs around that,” she said.

“Before Covid, we didn’t have to think about where the revenue was going to sit because it was very predictable. Nothing is predictable at the moment.”

Botica recently decided to close the restaurant’s kitchen earlier in the evening to control operating costs and ensure it remained open seven days a week.

“We’re not making decisions we want to make,” she said. “We’re making decisions we’re forced to make just to survive.”

Viv Beck, chief executive of Heart of the City, said some businesses in Auckland’s CBD were still grappling with the lingering effects of Covid on top of the economic downturn as they struggled to stay afloat.

“The overall foot traffic and spending have not yet returned to pre-Covid levels,” Beck said. “This, coupled with reduced discretionary spending in the difficult economic environment and the cumulative challenges faced throughout the Covid period, makes it an extremely difficult time for some businesses.”

Beck expressed hope that events such as Restaurant Month would attract consumers to Auckland’s CBD and help support local businesses.

“The timing [of Restaurant Month] was chosen as it’s typically a quieter time of year, and we wanted to help boost the hospitality sector when it’s needed most,” she said.