An upmarket Hamilton restaurant is throwing in the napkin as fine dining restaurants grapple with a "perfect storm".

Fewer people dining in the city's CBD has meant a sharp drop in turnover at award-winning Victoria St Bistro this year, the Lawrenson Group chief executive John Lawrenson said.

And it's not just Hamilton - the industry has had a slower few months nationwide as business confidence plummets and growth slows, according to the Restaurant Association of New Zealand.

The multiple award-winning Victoria St Bistro, co-owned by the Lawrenson Group, is set to close on September 1 after seven years of fine dining.

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The closure is part of a wider restructure of the Lawrenson Group's 16 establishments, with two other establishments set to close. Announcements around these will be made over the next couple of weeks.

While Lawrenson wasn't sure exactly what had caused the downturn, it has coincided with a slump in business confidence.

The ANZ business outlook for July showed a net 45 per cent of businesses were pessimistic about the general outlook for the economy. It is the most downbeat reading in the monthly survey since May 2008, when New Zealand was in recession and the global financial crisis was building.

Money worries could mean fewer people are eating out and opting for cheaper option when they do, Lawrenson said.

DOMINICO ZAPATA/STUFF Victoria St Bistro is set to close its doors for good on September 1 after a downturn in business.

A lack of foot traffic in Hamilton's CBD hasn't helped.

"The first two quarters of this year have been the worst two quarters I've ever had in business.

"We've got to make some hard decisions somewhere and [Victoria St Bistro] was one of the hard decisions. But unfortunately it isn't the only one. There will be others.

"There are two other [end of] leases coming up shortly which we won't be renewing in the central city."

GEORGE HEARD/STUFF Fewer people dining in the CBD has been hard on upmarket restaurants, Lawrenson Group chief executive John Lawrenson said.

Since the drink-driving limits were lowered in 2014, suburban restaurants such as Rototuna's Wayward Pigeon have performed better than those in the city.

Upmarket dining is getting tougher, anyway.

Hospitality NZ Waikato branch president Melissa Renwick said Hamilton restaurants are usually small or medium sized-businesses running on small margins with a lot of staff related costs.

And locals tend to opt for casual dining, Renwick said.

CHRISTEL YARDLEY/STUFF A lack of foot traffic in Hamilton's CBD has made business tricky for restaurants, Lawrenson says.

"In general, costs to business, wages costs and supplier costs are increasing regularly, however menu pricing has hit a ceiling with customers."

Labour's plans to scrap the 90-day trial for bigger businesses and increase minimum wage would make things tight for the Lawrenson Group, which employs more than 350 people, Lawrenson said.

"We are worried about the upcoming changes ... I have to make sure we come through this period."

But it was sad to see one of Hamilton's top restaurants go and he hopes it can be seen as a seven-year success, rather than a failure.

DOMINICO ZAPATA/STUFF Metropolis Caffe, just down from Victoria St Bistro, remains closed after changing ownership for the second time in two years.

"It's a beautiful restaurant that we have been very proud of.

"You've just got to make the smart call at the time and take the emotion out of it."

A few doors down, Metropolis remains closed after the owners struggled to cover bills.

Agenda Restaurant owner Logan Hughes said despite a good start to the year, dining in the CBD has been slower over the last couple of months.

"It's horrible when it's everybody because there's kind of nothing that you can do to change it.

"If it's something that just you're doing wrong in your business then you can actually adjust.

"I think everyone is definitely feeling it."

Restaurant Association of New Zealand chief executive Marisa Bidois said a "perfect storm" has been in the works.

The industry has experienced a buoyant growth period over the last three years, Bidois said.

"That increase in the last 12 months has come down."

Winter is traditionally slow for hospitality businesses and some parts of the country suffer more than others, Bidois said.

"Business confidence being at an all time low certainly doesn't help either."

When people are worried about money, fancy meals out are one of the first things to be cut from weekly budgets, Bidois said.

"It's kind of a perfect storm at the moment, with business confidence being low and a traditionally slow period for hospitality businesses as well as a slowing of that exponential growth we've seen over the last three years."

But nationally, the industry is still seeing a little growth year-on-year, just not as much, Bidois said.

"From what I've heard business owners are hoping business confidence will increase again and more people will start dining out.

"It isn't all doom and gloom."