’Restaurant industry on its knees’ dramatically writes the Financial Mail in a story headline this morning, presenting a picture of doom and gloom about our South African restaurant industry, one which has seen tough times since winter a year ago, a poorer 2019 summer and festive season compared to the years before, not being allowed to open their restaurants for Take-Away food production or delivery, and likely to be one of the last industries to be allowed to reopen in what President Ramaphosa called a ‘phased-in’ approach to opening up businesses within the Lockdown, about which he will reveal more in his sixth speech to the nation tonight.

The Financial Mail article quotes Restaurant Association of South Africa (RASA) Head Wendy Alberts as stating that ‘hundreds of thousands of restaurant workers are starving as they haven’t earned any money during the lockdown ….’  She estimates that the industry employs 800000 employees. She adds that the indistry has received no financial support from the Government in terms of the Unemployment Insurance Fund (UIF), banks, or their landlords, restaurants operating within a vacuum of information about when they are likely to be allowed to reopen. According to the article RASA ‘surveyed thousands of restaurants about their financial positions. Alberts says the answers overwhelmingly showed that restaurants were left on their own and facing imminent closure’. Not only have they received little financial support, but most do not have ‘enough working capital to reopen in the future’, with many having ‘high debt they would probably have to go into liquidation’. A further death knell for restaurants is that Take-Away deliveries from restaurants may become the preferred form of dining by South Africans. Delivery company fees are high, and restaurant owners would like to see these reduced so that they can make some money out of the deliveries. In addition to being the dining rooms for many single persons not wishing to cook, and meeting places, restaurants also create a buzz in popular tourist areas such as Camps Bay in Cape Town, Parkhurst in Johannesburg, and in the Waterfront.

The article also quotes Mozambik franchise owner Manny Nichas as saying that it will take 18 months for restaurants to return to full capacity. He adds that it is not only his 50 employees per each of his 17 stores that are going hungry, but their dependents too. Mozambik has already signed up with a delivery company to deliver meals from its restaurants when the Lockdown restriction on Take-Away restaurant meals ends. Privately owned restaurants stand a far greater chance of facing closures, it is written.

The Spur Group, which includes Spur, Panarottis, and Rocamamas restaurants, and employs 30000 staff in its 600 restaurants, announced this week that it will keep its restaurant closed after Lockdown is lifted, awaiting the normalization of the industry and the permission to serve alcohol. Its COO Mark Farrelly, speaking to Cape Talk, said that the first announcement of a COVID-19 case in our country affected its business, its March turnover dropping by 60% for the month. Spur has categorically told its landlords that it will not pay rent but is wanting to pay a turnover-related rental around 6%.

When top fine-dining restaurant owners such as Chef Luke Dale Roberts of the Test Kitchen Group closed down two restaurants during Lockdown and begged for funding from its past diners to support its staff, and Chef Peter Tempelhoff of Fyn begged for financial support to cover staff salaries and other overheads, one knows the fine-dining end of the market is in severe trouble, such restaurants having better chefs than business-savvy owners. A top end chef wrote in an angry reaction to the President’s Speech on Tuesday, stating ‘…And still none of us have received said funding…. All a croc I think. Also, asking for billions off the world bank. What happened to all the tax money they didn’t do anything with for the past few years? Also…taking a three month pay cut?! They shouldn’t be taking anything. Unbelievable really, it’s not their money’.

Chef Luke Dale Roberts’ The Shortmarket Club restaurant the first Corona Virus victim, in closing for good!

I am following a What’s App Group of restaurant owners, and have read that the first UIF payments were received earlier this week. However, they have not received UIF claim amounts in full, estimating that the first payment received has been about one-third of that claimed. In addition, their foreign national employee claims do not appear to have been paid.

Industry friends predict a bloodbath of Restaurants as they go into liquidation during and after Lockdown, a sad prediction for those of us who love eating out.

 

Chris von Ulmenstein, WhaleTales Blog: www.chrisvonulmenstein.com/blog Tel +27 082 55 11 323 Twitter:@Ulmenstein Facebook: Chris von Ulmenstein Instagram: @Chrissy_Ulmenstein