Restaurant industry reeling as operators run at a loss despite deliveries being allowed

The Covid-19 pandemic could put a final nail in the coffin for the traditional sit-down restaurant business model in SA, say industry members.

Wendy Alberts, CEO of the Restaurants Association of SA (Rasa), said the extended lockdown has been detrimental to business - and that them being allowed to operate delivery services had not eased the pressure.

She said a group of restaurants was set to take the government to court in the battle to get back in business.

“We need them [government] to take us seriously. We have a lot of restaurants who want to take the government to court, at the moment we are still preparing our papers.

“We are trying to be respectful of the restrictions but at the same time we are running at a complete loss and we have absolutely no support. It’s not right. The whole industry is crippled,” Alberts said.

Mozambik, the family restaurant group which offers Portuguese food, has echoed Alberts' sentiments.

They said after more than 10 days of trading as a delivery-only business, eased lockdown has not necessarily softened the blow of the pandemic’s impact.

Manny Nichas, Mozambik CEO, said while delivering was better than nothing, it remained impossible to sustain full restaurant infrastructure.

“As has been reported, deliveries have shown to settle at around 20% of normal turnover. Level 2 introduces takeaways and customer collections, but I doubt that it would have more than a 5% additional bottom-line impact.

“In a delivery or takeaway environment restaurants now have a greater competitor set as burgers, pizzas and more traditional hot food delivery items have had the delivery market sewn up pre-lockdown. Not only is it new territory to be totally reliant on this mechanism, but restaurants have to re-engineer entire business models,” Nichas said.

He said he believed that while the business would never be the same again, there is an opportunity to evolve. 

“The new normal, while yet to reveal itself in full, will be the science fiction of yesterday. After all, we are already in a place where, three months ago, nobody could have imagined.”

Last week, the newly formed Restaurant Collective said it sought to reinvent all aspects of the sit-down restaurant industry.

This is to create a safe, enjoyable environment for customers, and encourage entrepreneurship across the restaurant value chain.

“For the short term, we will address the challenges created by the lockdown and ongoing trade restrictions. For the longer term, we will address additional issues, many pre-existing, that are further reaching, with the aim of building a strong, resilient foundation for the industry as a whole to thrive,” said the Restaurant Collective.

The group wants the government to extend trading hours until 9pm on level 3 lockdown and review the minimum wage approach for all restaurant staff roles.