Opinion

Deliveries won’t be enough to save SA's ailing restaurant industry

Level 4 of lockdown will see eateries reopen for deliveries only. Chef Liam Tomlin of the acclaimed Chefs Warehouse group tells us why this isn't the lifeline his and other restaurants need

30 April 2020 - 00:00 By liam tomlin and Steve Steinfeld
South Africans will be able to order food for delivery from restaurants as the country moves into level 4 of lockdown on May 1.
South Africans will be able to order food for delivery from restaurants as the country moves into level 4 of lockdown on May 1.
Image: 123RF/warrengoldswain

First, I think it’s important to clarify that I am not saying that the food deliveries allowed during level 4 of lockdown, and the eventual option for customers to collect their own takeaways*, won’t work for everybody. I’m sure these measures will benefit many small businesses in the hospitality industry.

However, when one of the country's biggest restaurant chains, the Spur group, announce that they will not be reopening post lockdown as long as alcohol restrictions and a ban on large gatherings is still in place, it’s clear that the industry is facing problems that require a great deal of forward thinking and planning to rectify. Problems that deliveries and takeaways alone won’t solve.

While the government has announced the different levels by which the country will ease out of lockdown, these were put forward without dates or rules of play. This makes it extremely difficult for those of us in the hospitality industry to know what direction to take.

The business model of the Chefs Warehouse group [which comprises four restaurants in the Western Cape] simply can’t operate within the parameters of the regulations in level 4 of lockdown. 

Deliveries and takeaways are not a consideration, or even an option, as a standalone solution to generate the revenue needed to allow our restaurants to break even, let alone make a profit.

Like Spur and many others, our restaurants were designed (pre-Covid-19) according to a specific concept, targeting a specific market at a specific price point, with a specific number of seats needed to be filled day after day to make them individually viable businesses.

With a delivery or takeaway offering we would have no idea how many orders we’d need to cater for per day — at best it’d be a game of restaurant Russian roulette

On a “normal” daily basis we can accurately predict how many covers we will do and what revenue we will generate, taking into consideration different scenarios such as public and religious holidays, seasonal changes, festivals, no-shows and last-minute cancellations of bookings.

With a delivery or takeaway offering we would have no idea how many orders we’d need to cater for per day — at best it’d be a game of restaurant Russian roulette.

As soon as we turn the key in the front door of our restaurants, the overheads will start accumulating. Rent is a given, then there’s the electricity, gas, water, food costs, refuse removal, insurance, staff costs including their meals, uniforms and laundry, bank fees, insurance, telephone, internet, liquor licence, music licence, professional services and marketing.

No doubt there'll be a few new overheads for the proposed delivery or takeaway business too — like packaging costs and the expenses related to employing a third-party delivery service.

These delivery services generally take a cut of between 30%-35% of the purchase price of a meal to deliver it only a few blocks away, plus the delivery-person will receive a tip for their trouble. It seems to me such services will be the only ones making any money out of the deal — and without bearing any of the financial risks.

Restaurants in cities like Cape Town operate on tightly controlled margins as it is and the cash flow from deliveries is unlikely to cover a substantial portion of the costs outlined above.

If every restaurant in the city introduces a special takeaway menu, as many will, the competition will be tight. We will be servicing the same limited market but selling our product for 50%-60% less than our normal menu prices, and without the chance to generate the extra revenue that's made by offering sit-down customers a pre-dinner drink, a bottle of wine or a dessert and coffee — yet we’d have the same overheads in place.

To compound matters there will be a curfew from 8pm every evening. That equates to getting last orders into the kitchen by 6pm, with the last delivery going out by 7pm, to allow time for staff to clean down, pack away and still get home safely before the curfew comes into effect.

The government is going to have to do more for the restaurant industry than they are currently doing to help save some of the 800,000 jobs it creates

The government is going to have to do more for the restaurant industry than they are currently doing to help save some of the 800,000 jobs it creates, not to mention all the other industries that depend on us to survive.

Between the restaurants in the Chefs Warehouse group we have more than 100 different suppliers and services that we use on a daily basis, the majority of which will not benefit from us running a delivery or takeaway service.

All said and done, I encourage you to support your favourite eateries' delivery and takeaway offerings, as doing so could make a big difference to the future of those businesses.

However, for Chefs Warehouse group, and many others like us, deliveries and takeaways are not an option, and are unlikely to be the solution required to get the restaurant industry back on its well-worn and blistered feet.

*The collection of takeaways by customers will apparently be allowed from level 3 of lockdown.