Joburg restaurants face ruin if booze restrictions continue: property group
Embattled restaurants in Joburg may have to shut their doors if the government extends the booze ban.
Many businesses were struggling to catch up on rent arrears when the latest level 4 restrictions were implemented, placing them in financial jeopardy, said Michelle Dickens, CEO of property group TPN.
“These latest restrictions — which some analysts predict may be extended beyond the initial two weeks announced by President Ramaphosa — are not being accompanied by any plans from the government to provide financial support for businesses affected by the restrictions,” Dickens said.
While the Property Industry Group, a collective of some of SA's top real estate bodies, had provided R3bn in rental relief to small and medium enterprises during the first hard lockdown, TPN analysis showed that even this had failed to stop “a flood of delinquencies”.
The number of tenants owing three months or more in rent increased from 7% before lockdown, to 10% in April 2020 and peaked at 19.12%, or one-in-five tenants, in September 2020.
This level had improved slightly to 15.42% by March 2021 as the economy began to reopen but there are fears that new level 4 restrictions will wipe out these gains.
Alcohol sales account for a major portion of restaurant profits, said Dickens. While they were permitted to sell takeaways, this was not enough to cover their bills.
Struggling restaurants include the Local Grill in Parktown North and Turn ‘n Tender in Cresta Shopping Centre.
The Local Grill employs 26 staff and three managers. Its two owners have not drawn a salary for more than a year, said Dickens. Meanwhile, the three-year-old Turn and Tender was still struggling to pay off new business debt and any extension of the booze ban would likely see the restaurant fall further behind in its rent.
Even well-established hotel groups such as Sun International are struggling. Last week the group said it was shutting down its hotels and resorts until restrictions were lifted.
Dickens noted the commercial real estate sector had just started to show signs of recovery and the number of tenants in good standing was improving when the new restrictions were announced.