Closure and liquidation a daily conversation for South African restaurants under lockdown

South African restaurants are under extreme pressure, and talk of closure and liquidation has become a daily conversation for many as the sector grapples with the restrictions placed on it by the nationwide coronavirus lockdown.

As South Africa enters into its ninth week of high level lockdown restrictions, some solace comes with the imminent move to level 3 at the end of the month.

However, while level 3 is expected to bring with it more freedom of movement and opportunity to return to work for many individuals, the restaurant industry will likely continue to suffer.

According to draft lockdown restrictions published by the Department of Cooperative Governance and Traditional Affairs in April, while being able to open up for delivery under lockdown level 4, restaurants would only be allowed to accept in-store food collections at level 2, and have sit-ins at level 1.

Government is talking up a move to level 3 in June, and possibly a more rapid move to fully opening up the economy, but projections from analysts have pegged a move to level 2 or 1 only at the end of the year.

Speaking to 702, Wendy Alberts, chief executive officer of Restaurant Association of South Africa, said the situation is critical, and the sector is considering taking the matter to court to try force government to let the country’s restaurants open sooner.

“The pressure is getting critical in the industry; the repercussions (of the lockdown on) all our restaurants, and the opening for delivery only has been dramatic on our finances,” she said.

“We are just getting deeper and deeper into debt and this is not good for the restaurant industry.”

Alberts said that initially it was only small businesses that were being affected, but now large businesses are also feeling the pain, and they are lending their voices to the cause.

Financial suicide

She said that restaurants that have opened up for delivery under lockdown level 4 have done so to their own detriment, calling it “financial suicide”.

Despite this, there are many reasons why they have done so, she said. It has been good for brands (meeting customer expectations and demand); they’ve helped keep the economy going; and they’ve kept staff employed.

However, Alberts pointed out that third party companies who are facilitating deliveries are taking up to 40% of turnover in an already-strained environment.

“I don’t think we’ve yet seen the full scope of the damage to the industry,” she said. “We are respecting the views of government and are continuing to work with government – but we are asking them to please understand how the industry works.”

She said that the industry has had some support – particularly from landlords, in terms of rent, and from some finance houses and banks.

“But when you start dissecting things and going through the elements…there’s no possibility to survive in the next couple of weeks,” she said.

“Liquidation and closure is imminent. It’s a conversation happening every day.”

Getting back to it

Responding to concerns over health and safety, should restaurants be allowed to open, Alberts said critics need only compare it to any other place that has been allowed to open.

She said the risks of sitting at a restaurants are no more than standing in queues to buy food, or anywhere else that is open.

“Restaurants already have some of the highest health standards. We are ready to get people back to work,” she said.

A lobby group called The Restaurant Collective previously published a host of guidelines it said could be followed to allow restaurants to open under lockdown level 3.

Read: South African restaurants call to open at level 3 – under these conditions

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Closure and liquidation a daily conversation for South African restaurants under lockdown