Hospitality Magazine

It’s all in the experience

There has been a trend occurring in the New Zealand hospitality industry for the last decade. That is for greater consumption away from licensed premises. A decade ago it is estimated that the split was 40% on-premise and 60% off-premise. Today that split is 70% off-premise and 30% on-premise. The major reason for this shift is the growing disparity between the price of beverages on-premise versus off-premise. A decade ago it was possible to buy a dozen stubbies for around $10. It is possible today to still pay little more than that for the same dozen. Meanwhile, on-premise prices have virtually doubled.

This leaves customers with a choice. They can go to the supermarket, pick up some cheap beer or wine, and a couple of pizzas, and go home and watch their favourite footy match on SKY Television. The alternative is that they can go to a bar and pay a premium for their food and beverage and watch the same footy match. The difference in price equates with the value of the experience of being in the bar as opposed to being at home.

The bars and hotels which are full every Saturday night are those providing a genuine added-value experience that their customers are prepared to pay for. The disparity between on and off-premise pricing is going to continue. Hospitality operators are therefore going to have to invest more time and effort into ensuring that the experience they offer their customers exceeds the investment they need to make.