First Covid, now blackouts cripple South Africa’s restaurant industry

Just as restaurants were recovering from the Covid-19 pandemic, Eskom’s rolling blackouts are making it hard to keep their doors open.

The Federated Hospitality Association of Southern Africa (Fedhasa), which represents accommodation and eating establishments nationally, has painted a bleak picture of the impact load-shedding is having on those struggling to keep the lights on.

Rosemary Anderson, Fedhasa national chair, said the energy crisis is having a “significantly damaging effect on restaurants, with few of them able to provide adequate backup power to operate at 100%”.

Stats SA’s latest liquidation data shows company liquidations increased by more than 30% in December 2022 year-on-year. In that month, 159 liquidations took place, up 30.3% from the previous year.

For the entire year, statistics show 1,907 businesses and companies were liquidated, mostly in finance, insurance, real estate, trade, catering and accommodation.

Anderson said restaurants by their very nature have high energy-consuming equipment.

“Restaurants simply can’t afford or don’t have sufficient space to provide adequately sized generators or solar to substitute 100% for load-shedding.

“Buying in bulk to access greater discounts is now no longer viable for restaurants, since it is very difficult to keep one’s produce fresh in refrigerators and deep freezers with electricity off for so many hours in the day.”

She said the forced closure and severe restrictions imposed on restaurants for two years during the pandemic left “many restaurateurs financially vulnerable and compromised”.

“The additional burden of ... having to invest in alternative energy infrastructure and the running costs of generators is making it very difficult for restaurants to remain financially viable. 

The additional burden of having to invest in alternative energy infrastructure and the running costs of generators is making it very difficult for these restaurants to remain financially viable.

—  Rosemary Anderson, Fedhasa national chair

“Hence, a number of them are calling it a day, which is not only tragic for the owners, but for their employees, who have now lost their livelihoods.”

Anderson said all restaurants are being affected by blackouts.

“Even if one is positioned in a mall where there are backup generators, the restaurateur now has the additional financial burden of having to pay the landlord for running costs of the generator or the alternative energy supplied.”

She said it is “almost impossible” to run a restaurant without backup power.

“The equipment in restaurants is energy heavy, especially convection ovens, so it is very difficult to get by without a decent-sized backup generator, which can cost anything from R100,000 upwards.”

The blackouts are also affecting food stock.

“There are no figures calculated to ascertain this. However, many restaurateurs are now buying stock on a daily basis, which is time-consuming, expensive and not sustainable.

“Our margins are getting squeezed from all sides. Rates, rentals, food costs, electricity and water costs, the minimum wage has just gone up by 9.6%. Many of these additional costs can’t be passed on to the consumer, so the industry is having to look at smart, alternative ways to reduce costs to stay afloat.”

Lavine Chinsamy, who owns My Food Joint in Tongaat, on the KwaZulu-Natal north coast, said he is on the brink of closing his doors.

“I tried my best to keep my doors open, but as the energy crisis gets worse, we have had to make a decision to close up within the next three months.

“This means three staff members will be out in the cold. We have not been able to sustain ourselves in a business that cannot function at its optimum.

“Sadly, after eight years, we have to consider closing.”

Chinsamy said he is trying to stay open for three months to allow his staff to find alternative jobs.

“I’m not closing with immediate effect because I need to give my workers some peace of mind. I also need to try to sell some of my equipment and the best way to do it is while we are still in operation. I need to recoup my capital that is in the store.”

In Braamfontein, Johannesburg, Leano Restaurant and Live Music closed in December due to load-shedding and other factors.

Co-owner Keitumetse Molatlhegi said, like many businesses, they were affected by ongoing load-shedding, worsened by lack of investment and support from the public and private sectors.

“As a result of challenges we faced as a business, which included covering our overheads, we reached out to public and private funding entities, but all our efforts failed.”

She said the closure affected her young staff, who had an opportunity to earn a living, as well as the creatives who had a platform on which to perform.

Mike Wiggett, who owns Salt and Lemon and Madeira’s Bar and Bistro in Cape Town, as well as Club Haze in Ceres, said he has been severely affected by load-shedding.

We can’t close our doors. We have more than 100 staff members we consider family. The socio impact of load-shedding goes far beyond my business. The knock-on effect is shocking.

—  Mike Wiggett, restaurant owner

“Between our three businesses we have spent close to R2m on solar panels, inverters and batteries. 

“I invested R500,000 on a system that is dedicated to Stage 4. Eskom promised us last year there will be no high stages. Now my batteries are popping after two hours.

“I have had to spend a further R120,000 for more batteries so they last four hours instead of two.

“Most of our deep fryers use three-phase electricity. The gas fryers cost between double or triple the price. Now I have to pay a further R35,000 for a gas fryer.

“Even if I do have a R500,000 system, its single-phase electricity. It's not just me, it’s all the restaurants using deep fryers.

“We can’t close our doors. We have more than 100 staff members we consider family. The socio impact of load-shedding goes far beyond my business. The knock-on effect is shocking.”

Wiggett said he has also, at times, had to return meat and vegetables to his suppliers.