Very little relief on the menu for restaurants

South Africans waited with bated breath on 24 May to find out what the government had decided about the lockdown level we would be living under as of 1 June. And while many business owners would have breathed a collective sigh of relief, there are still a vast number of businesses that are not going to be permitted to operate at full tilt – or at all – come 1 June.

Since the national lockdown was first implemented in March, the restaurant industry has been hard-hit. Wendy Alberts, CEO of the Restaurant Association of South Africa (Rasa), estimates that the lockdown has left close to 800 000 people in the industry without an income.

This compares with the 430 000 employees in the country’s mines, according to Stats SA figures. Since the lockdown began eight weeks ago, Rasa has been engaging with various role players across the industry in order to mitigate the consequences of the lockdown, as well as advocating for the industry with government – which involves getting staff back to work and looking at ways of reducing overheads, among other things.

Speaking to finweek in the week leading up to the president’s latest announcement, Alberts explained that the key focus in engaging with government had been to open the industry for contact, collection and drive-through – level 4 only allowed for deliveries – with the next step being to advocate for sit-down in level 3 as opposed to level 1.

As of early May, The Restaurant Collective – an association of sit-down restaurants including Ocean Basket, Tasha’s, Signature Restaurant and Famous Brands-Signature Brands – has been advocating for level 3 to allow sit-down dining as well. “We need to open,” says Grace Harding, CEO of Ocean Basket and spokesperson for The Restaurant Collective, in an interview with finweek.

In this vein, in early May The Restaurant Collective started to develop a hygiene and governance protocol for the safe opening and operation of restaurants, which was submitted to the Tourism Business Council of SA (TBCSA) on 22 May.

A few days later, the president’s announcement made it clear that restaurants wouldn’t be allowed to welcome patrons to sit down for a meal under level 3 lockdown.

Although the respective ministers will be clarifying the lifting of various restrictions, as the order of lockdown regulations currently stand, restaurants will now be permitted to add collections and drive- through to their operations, but will only be able to function on a sit-down basis, whereby customers can dine on site, once lockdown level 1 is reached.

With no sign of that happening any time soon, restaurants across SA – whether it be your local pizzeria, a franchised restaurant located in a mall, or a fine dining establishment – are facing the very real threat of not surviving Covid-19.

Why deliveries won’t cut it

Like most other businesses, restaurants were shut down completely at level 5. At level 4 they were given the go-ahead to operate on a delivery-only basis, but this has been of little consequence, says Harding.

“Many think that now that deliveries are a thing, we can make a living. We can’t. Sit-down restaurants are very different from takeaways… In normal times deliveries are about 10{e93887a69cdd95d753f466db084bbc3aa0067124675315461d28d68a72842cc2} of our sales. We are not going to be able to pay staff, utilities, suppliers etc. with that.”

Furthermore, when restaurants make use of a third-party delivery platform, like Uber Eats or Mr D, deliveries can only be made to customers within a limited radius of around 5km, and the restaurant has to pay up to a 30{e93887a69cdd95d753f466db084bbc3aa0067124675315461d28d68a72842cc2} commission on the meal ticket.

“Deliveries are not going very well. We are operating at about 25{e93887a69cdd95d753f466db084bbc3aa0067124675315461d28d68a72842cc2} to 30{e93887a69cdd95d753f466db084bbc3aa0067124675315461d28d68a72842cc2} of our usual turnover at all three stores. We have encouraged customers to order directly with us for delivery, but even then the orders are few and far between and our in-house delivery radius is still no more than 6km or so due to the way food travels, driver logistics etc.,” says Lexi Monzeglio, founder of Lexi’s Healthy Eatery.

Unable to operate at full capacity, and with deliveries proving unprofitable, some restaurateurs have come up with innovative ways to generate income. Brik Cafe´ in Rosebank, for example, has created ingredient boxes that “include a collection of fresh seasonal fruit and veg and some of our house-made favourites like yoghurt, granola, chakalaka, jam and pulled brisket”, says Sasha Simpson, owner of Brik.

“The boxes were extremely helpful just before lockdown and helped us pay all the staff full salaries in March. We are still delivering the boxes once a week on pre-order and have included a personal shopper option called ‘from our pantry to yours’ where customers can tick items from a list of fridge and shelf fillers that we either stock or make at Brik for delivery or for street collection.”

Lexi’s Healthy Eatery has launched a frozen meal line, which is going quite well, according to Monzeglio. “We are also in the process of finalising a retail line, which we are hoping will also help our revenue in future.

“The possible silver lining is that we have been pushed into a retail space – and if this pivot is successful, we will be able to operate at a lower capacity in the restaurants while continuing to build our business and the brand,” she says.

Prepping for the future

The decision to uphold level 3 lockdown restrictions certainly dealt a blow and will likely be challenged. When asked about this, Harding explained that the TBCSA is working on “some plans” and that The Restaurant Collective is also going to be putting out formal messaging to show “they are ready”.

According to her, the protocol for safe opening that The Restaurant Collective has put together will be available on their website and they will start training restaurant owners and managers to adhere to this protocol in the first week of June.

The rationale behind this is that they want to show government they are ready to implement all the necessary measures and that the industry is prepared to take responsibility. She believes that “if we start to open the tap cautiously, in a considered way, it might be a better solution than either or. The fact that industry is collaborating can take a little bit of pressure off government.”

Regardless of whether Rasa, The Restaurant Collective, or others in the industry successfully manage to advocate for bringing forward the lifting of restrictions on restaurant operations, the traditional sit-down model will shift markedly. Restaurants will not only have to try and pick up the pieces after the lockdown, but completely reinvent their business models to survive in a world where social distancing needs to be the order of the day in an industry that is built around socialising.

Simpson says, for instance, that the future of Brik as a restaurant may change indefinitely due to the Covid-19 restrictions. She is in discussions with like-minded colleagues about possibly creating a co-op “where we share resources and expenses. We are also in the process of strategising the opportunity of turning the cafe´ into a general store that stocks a range of items such as frozen meals, fresh produce, products from local businesses and sustainable living products.”

For Monzeglio it’s also hard to say what the outlook for the industry after the lockdown is, but she admits the general feeling within the industry is that the future is very grim. She also points out the fact that eating out is a luxury spend – lest we forget that restaurants will need to attract cash-strapped consumers that have themselves been holding their breath as they prepare to adapt to a new reality.

This article originally appeared in the 4 June edition of finweek. Buy and download the magazine here or subscribe to our newsletter here.

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