Fast food and takeaways should be allowed under South Africa’s phased lockdown lifting: association
Following the announcement that it will ‘incrementally lift‘ South Africa’s lockdown, the Franchise Association of South Africa (FASA) has asked government to include fast food and takeaways as part of the country’s essential services.
Prior to the lockdown, this sector of the franchise industry had already taken steps to augment their preparation procedures to deliver contactless food orders to their customers, said Vera Valasis, FASA’s executive director.
“While one can understand that government decided to take very strict measures to damp down the spread of the virus, we believe not having an alternative to their need for food, people are being driven out of their homes to buy food so there may be an even greater risk in not allowing contactless food delivery or for so-called dark kitchens to continue offering cooked food to consumers,” she said.
“Delivery services have been operating all along, so allowing them to deliver prepared take-out or fast food in addition to their other essential supply deliveries, makes for good economic sense.
“This would go a long way to minimise job losses and keep the franchise workforce earning much-needed income to support their families.”
Valasis also warned that the entire franchise industry will need additional financial relief from government once the lockdown is lifted.
The industry generates approximately R734 billion to the economy, according to Sanlam’s 2019 Franchise Survey. Approximately 500,000 employees enjoy permanent employment nationwide in its 48,000 franchised outlets and 824 franchise companies – contributing just under 14% to the country’s GDP.
“Since the implementation of the Covid-19 emergency measures, around 94% of the industry has not been trading, with the exception of mostly food retailers,” Valasis said.
“This has had a devastating impact on the industry and it is feared that unless more financial aid is provided some 15% i.e. 75,000 jobs could be lost in the industry.”
Rental and financial relief
Valasis said that rental relief and loans are mostly offered on a basis of deferment of debt or a payment holiday. She added that once the lockdown has been lifted, it is not expected that business and sales would continue as normal.
“However, once businesses re-open, landlords would most certainly revert to lease agreements that are in place, demand rentals and deferred arrears straightaway as would suppliers and other debtors.
“Small business owners who are indebted by Covid-19 emergency fund loans would not cope under such a huge debt burden and further job losses would most certainly follow.
“Therefore, we urge you to call on the banking industry and others to make meaningful contributions to small business in the form of immediate grant funding to save jobs and keep the economy going.”
On the other side of the Covid-19 crises, lenders with particular reference to the South African banks should be called upon to agree to soften their very strict lending criteria, said Valasis.
She said that the country’s banks are notoriously risk-averse and it is difficult for any potential business owners to obtain funding from a bank.
“Should the banks agree to consider business loan applications for franchised outlets on a less-risk averse basis, we believe it could make a material difference in getting people back into business or start new ones quickly thus stimulating employment and economic activity,” she said.
Read: New regulations as South Africa prepares for ‘incremental’ lifting of lockdown
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