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.
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.
Chris von Ulmenstein, WhaleTales Blog: www.chrisvonulmenstein.com/blog Tel +27 082 55 11 323 Twitter:@Ulmenstein Facebook: Chris von Ulmenstein, My Cape Town Guide/Mein Kapstadt Guide Instagram: @Chrissy_Ulmenstein @MyCapeTownGuide
20
3070
27k
20