Restaurant industry grateful for lifting of alcohol ban, but recovery needs lifting of Curfew and international tourists too!



The South African Restaurant industry is very close to collapse, and is in urgent need of a cash flow injection to survive, a major finding of a study conducted last month, as a follow-up to a survey which the Esus-Group conducted in June 2020.  The lifting of the alcohol ban from midnight tonight is a step in the right direction but the Curfew must be lifted too and the international borders must be opened, says Restaurateur Giles Blanc, and Co-Director of the Esus-Group, which has international Hospitality interests, and owns The 41 and The Korner restaurants in Cape Town. Blanc announced on Friday that he will soon reopen The 41 for the first time since Lockdown commenced in March.  

Termination of Government support in paying staff UIF/TERS could lead to the death of the restaurant industry!


According to the study published by the French & South African Chamber of Commerce and Industry in collaboration with six other international chambers, ‘13% of businesses in the Restaurant sector have already closed down, and 74% of the remaining businesses need an urgent cash flow injection to survive. In this context, an urgent lifting of lockdown measures is imperative’, Blanc wrote last week.
When you consider that one in ten direct jobs in South Africa comes directly from the tourism industry, plus all the indirect jobs from suppliers, the health vs. economy trade-off is no longer tenable. Our employees want to go back to work to survive and our companies need decent working conditions. Without the return of alcohol sales and the opening of borders, our sector cannot recover. The virus will not disappear on its own, and only a vaccine will protect the most vulnerable populations. In the meantime, we must therefore learn to live with the virus for several more months,’ he added.
The report confirmed the economic non-viability of restaurants without the possible sale of alcohol or having to operate under the constraints of a curfew. For one-third of the restaurants in the survey sample, Alcohol accounts for more than 50% of their turnover, and an even more significant share of their profits!
From tomorrow just after midnight the sale of Alcohol until 22h00 daily is permitted by licensed restaurants again, a huge boost for the restaurant industry.
It must be understood that in the business model of a restaurant, food is a commodity on which the restaurant owner makes no money, or only very marginally. In my restaurants, 70% of my profits come from the bar,’ Blanc explained.
The South African Tourism and Hospitality industry, including Restaurants, contributed R425,8 billion to the economy, represented 8,6% of economic activity, and generated 1,5 million jobs in 2018, making it the largest tourism economy on the African continent.
The survey conducted on behalf of the French South African Chamber of Commerce and Industry took place from 14 to 27 July, with 175 company representatives of the Tourism and Hospitality industry interviewed, just over one third each being Restaurants, Bars, and Clubs, and  Tourism companies. The remainder of the sample was accommodation establishments, events and catering companies, and wine and spirit businesses. The sample of companies represented a total of just under 10000 jobs.

The survey found that just under two-thirds of the respondent companies were temporarily closed, closed down permanently, or filed for bankruptcy during Lockdown, those closing down predominantly being small businesses. Three-quarters of the sample have resorted to temporary lay-offs of staff to date, the majority of these companies having temporarily retrenched the majority of their staff. More than a half of the companies permanently retrenched some or all its staff. A total of 78% of the companies stated that they are financially dependent on additional UIF/TERS funding. Almost three-quarters of the companies used additional funding sources, such as loans, to keep their businesses alive. More than half of the companies supplemented the income of their staff, almost all indicating that the Government grants were not enough to keep their companies afloat. A total of 81% of the businesses have been able to negotiate rents with their landlords. Just more than half feel that it will take a year for their businesses to resume normal activity. The outlook for the next twelve months is viewed very negatively.  Solutions considered are improving their business profitability, finding new markets, diversifying their offer, and improved marketing.

At the time of the survey 41% of Restaurants, Bars, and Clubs had not reopened. Two-thirds of those that did reopen are running at a loss, and consider closing their businesses. One-third of these businesses reported that Alcohol sales represented more than half of their 2019 turnover. Restaurants currently closed will reopen when the Alcohol ban and/or the Curfew are lifted, which means that not every restaurant is likely to reopen from midnight today. Two-thirds of these businesses stated that they will not look to increase prices to absorb some of their financial losses.

In a qualitative section of the study, respondents made suggestions and provided spontaneous comments:

#  They require an extension to the UIF/TERS payments

#   ‘This is the greatest crisis faced by the industry’

#  ‘The emotional toll …. cannot be ignored’


When I called Blanc this morning for an update on his Survey outcome, he sounded upbeat about the relaxing of the Alcohol ban, so much so that he will reopen his Camps Bay restaurant The 41 on 4 September. But he emphasised that in the longer term the Curfew must be lifted or have a later start, and that the international borders must reopen, tourists being the lifeblood of the Tourism and Hospitality industry.


About Chris von Ulmenstein

Chris von Ulmenstein, WhaleTales Blog: Tel +27 082 55 11 323 Twitter:@Ulmenstein Facebook: Chris von Ulmenstein, My Cape Town Guide/Mein Kapstadt Guide Instagram: @Chrissy_Ulmenstein @MyCapeTownGuide


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