Tag Archives: credit crunch

New restaurant openings give hope

A number of new restaurants have opened recently in Cape Town, and this is a positive sign that restaurateurs see an end to the credit crunch and are positive about the future.

New restaurants, as featured on the Eat Out website, include Bravado, an Italian restaurant in the previous Melissa’s in Green Point; an Indian restaurant Bhandaris in Tokai; the bistro Cafe Sociale in Woodstock; a fusion restaurant Cheyne’s in the City Bowl; and Kassia and Figg, a deli and health shop in Kalk Bay. 

In the Helshoogte Pass between Stellenbosch and Franschhoek the chic Delaire Graff Estate restaurant has opened with chef Christian Campbell at the helm.   It promises to offer fine-dining at its best, and will be an interesting counterpoint to Tokara directly across the road.

In Knysna the new DISH restaurant, with beautiful interior decor, has opened in The Rex Hotel.   The chef was previously with Tank in Cape Town.

Whale Cottage Portfolio: www.whalecottage.com

SA is BA’s most popular long-haul destination

British Airways has confirmed that its prediction that South Africa will be its most popular long-haul destination has been proven correct. The airline has increased its market share to the country by 4 % by increasing the number of its flights, to Johannesburg in particular, at a time when the credit crunch has reduced the airline’s capacity on other routes, says an article in Business Report.

The airline’s Ashley Cowen, General Manager for Africa and Asia-Pacific for the airline, says that it has achieved “fairly good passenger loads”, utilizing special offers. The Confederations Cup and the British and Irish Lions rugby tour created good additional support for the airline.

Whale Cottage Portfolio:  www.whalecottage.com

Profit pressure due to price push

The hospitality industry is under severe pressure to survive financially, given the decline in occupancy, and the reduction in rates to attract bookings and to conserve cash flow.

The increase in telephone costs, electricity costs, in the price of petrol and diesel, and in the Minimum Wage, combined with the lack of a cut in the interest rate by the Reserve Bank last week, is a severe blow to the industry, but also affects every South African household, the main source of income for the industry.

The worst shock is the increase in the price of electricity by 31 % from 1 July.   The increase is justified on the basis of new electricity infrastructure that is required, to prevent electricity load-shedding, as was experienced in 2007 and 2008.   Eskom had requested a 33 % price increase.

The price of petrol is set to increase by 40 cents a litre from 1 July, raising the price to R 7,90 a litre in Gauteng, reports Reuters.

TELKOM boasts about a minimal rise in its costs to consumers, but has sneakily left out the call cost increases of 11 %.

For hospitality establishments with fewer than 10 employees, the Minimum Wage increases by 11% to R 1 843,23 per month, R 425,43 per week and R 9,45 per hour from 1 July.   The formula for calculating the annual increase has been laid down by the Department of Labour ( consumer price index + 2 %).   Many staff may be prepared to hold their salaries to ensure that they maintain their jobs, but this flexibility is not allowed by the Department, who could not have foreseen the credit crunch when it introduced the Minimum Wage for the hospitality industry in 2007.

Cape less crunched than rest of country

The Western Cape was least affected of all the provinces by the credit crunch in April, according to the BoE Private Clients barometer, and reported in the Cape Argus.  

The economy of the Western Cape shrunk by 7 % in April, compared to 14 % in Gauteng.   The Eastern Cape was also hard hit.   Manufacturing, financial, real estate and business services were the sectors worst hit by the credit crunch in April.

Economist Mike Schuessler has predicted that the interest rate and inflation reductions should stimulate consumer spending, particularly in Gauteng, which has the highest debt levels.   Schuessler says that economic activity in April and May hit “an all-time low”, and that it was difficult to predict when the economy will turn.

Good news is the prediction in the Cape Argus that two further rate cuts of 0,5 % may be in the pipeline for this year, due to the severe 22 % decline in Manufacturing in April.   The Reserve Bank’s Monetary Policy Committee next meets on 25 and 26 June.