The restaurant industry in South Africa is not what it used to be several years ago. We all know this. The “you-know-what-demic” in 2020 that we’re still trying to emerge from three years later has irrevocably changed the way restaurants operate.
Data backs this up, with Stats SA finding that both hotel room occupancy and the real income of restaurants were still 35% below pre-2020 levels, despite high year-on-year growth rates.
It’s easy to see even without stats and figures giving a visual representation. All you need to do is go out for dinner or drinks to any restaurant in Joburg. Take note of what time you’re asked to place your final orders for drinks and coffee and what time staff begin blatantly packing away chairs and tables, indirectly signaling that it’s time to pay your bill and move on. No matter where you are, chances are high that this will be before or by 10pm, which was unheard of for so many restaurants in Joburg pre-2020.
Why is this happening? Why are so many restaurants and bars still not operating at the capacity they were before 2020? And does it make business sense to close by 10pm, even if that means turning away patrons wanting to spend more at your establishment?
To better understand why restaurants are shutting their doors so early, fully aware of the revenue they’re essentially turning away, it’s important to examine how the food and beverage industry has managed to recover after almost two years of ongoing lockdowns, alcohol bans and other nightmare fuel.
Stats SA reports that the food and beverages industry generated R5.6 billion in total income in September 2022, an 18.6% increase compared to 2021. While this is a great improvement, it’s still far off from the levels seen in 2019 (R6.5 billion).
We can see this trend replicated in stats relating to the performance of the hospitality industry in general. Mordor Intelligence reports that the number of arrivals passing through South Africa’s entry points rose by 145.4% between 2021 and 2022, increasing from 117,557 in April 2021 to 288,430 in April 2022.
While this is a great improvement, we’re still not seeing the number of tourists that we did before 2020. According to Statista and the Government of South Africa, South Africa welcomed a total of 2.26 million international tourists in 2021 and 4.5 million in 2022 - still far below the 10.23 million who visited in 209.
As an important sector in the hospitality industry, it makes sense that restaurants are still not operating as they were before, in light of the significantly lower number of visitors around. But is it just the lack of tourists that's causing restaurants and bars to shut their doors early?
Let’s take a look at external factors that might be causing restaurants to close their doors early:
THE FAST RISE OF FOOD DELIVERY OPTIONS:
It’s almost impossible to walk to your nearest coffee shop without seeing an Uber Eats and Mr D Food motorcycle race in between traffic lights. Both providers have improved delivery times, added more food options and improved user experience on their apps.
RISING COST OF LIVING:
South Africa has not been excluded from the worldwide rise in interest rates, affecting everything from rent, fuel, electricity and much more. Restaurants are not excluded from this, balancing customer service and staff costs. The average Joe is living tight and luxury nights out might be top of the budget to cut.
CHECKERS SIXTY60 AND PICK & PAY FRESH
Cooking a meal at home has never been easier; Forget a key ingredient? South Africa’s major grocers will race to have it with you for dinner that evening.
Take into consideration that most consumers don’t want to risk the lack of traffic lights on the road in the evening, combined with the convenience of cooking at home. Restaurants are battling the giants.
THE AT-HOME DINING EXPERIENCE
We saw glimpses of this during the you-know-what, and we believe there is still a big opportunity for this in today’s market. Good packaging, a fantastic meal, and a touch of your specialty could set you apart from other options on food delivery apps. Food delivery doesn’t have to be pizza and burgers only.
WORK FROM HOME LUNCH BREAK
The work-from-home sensation is in full swing, meaning lunch break has a brand new look to it. Who is eating lunch with you, which promotions are you putting out there and how are you getting them to come back? There is a big opportunity to get those laptops into your restaurant for lunch, making up for late-night dining revenues.
SPECIAL OCCASIONS
South Africans love celebrating a special occasion, and depending on who you ask, a special occasion could be surviving a busy Monday at the office. In all seriousness, there is something special about blending special memories with great food, we can’t go without it.
This will require restaurants to get to know their diners. Birthdays, wine pairing experiences, and anniversaries are the times when we want to spend big and have a great time with people near to us. There is a world of opportunities here for restaurants.
South Africans love the springboks, sunshine, and good food. There will always be opportunities for restaurants, it's just about meeting the consumer's needs.
I recently saw my local pizza pub joint filled for two days, promoting pizza and drink specials for rugby and cricket games. A kids' play area with a magician gives parents a well-deserved break. The opportunity is there for agile and flexible restaurantiers.
