The sit-down restaurant industry's blueprint for recovery

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Sit-down restaurants are limping

Since opening on June 29th, most are trading below 50% of usual turnover. This loss of cash-flow has depleted businesses and individuals of any reserves and timing is now critical. Without immediate action, these losses are likely to be permanent.

There are many contributing factors:

• No alcohol sales

• Curfew of 9pm

• Customers uncomfortable eating out

• Customers have lost their jobs – the dire economic state of our country is going to have the biggest impact on our industry

• Implementation of lock down regulations (reduced capacity due to social distancing regulation requirements)

Roadmap to recovery

The R|C is presenting a blueprint for its own recovery, but we need the ear and the support of the relevant government departments (including the Departments of Small Business Development and Tourism) to make this a reality. We need less experienced restaurant owners to be mentored by more experienced owners. We need to set up a task group of diverse skills – both private and public.

The immediate support the industry needs:

• Speed up and resolve the delays in UIF and TERS pay-outs – thousands of employees are not yet back at work as restaurant owners cannot afford full staff complements

• Allow restricted alcohol sales for licensed sit-down restaurants

• Amend the current curfew time to 10pm

• Reduce VAT by 5% - and keep it that way until June 2021

• Introduce tax incentives for SMMEs that are able to grow employment

• Work with banks to reduce credit card and cash deposit fees for one year

• Reduce rates and utilities costs charged by landlords by 50% for one year

• Impose on utility providers not to demand payments while restaurants were/are unable to trade

• Continue PAYE deferments and provide an incentives claim system to aid the long-term ability of entrepreneurs to employ people without shouldering tax burdens

• Collaborate with key financial institutions to to tailor products to those industries hardest hit by Covid

• Create qualifying criteria for these relief benefits and develop online applications where an automated scorecard can assist with the allocation of funds.

The domino effect

There is a domino effect - as SA business leader Vusi Thembekwayo has explained – and the impact of restaurants closing down includes:

• Greater demand on government for UIF grants

• Reduced taxes

• Taxi business is impacted due to reduced number of commuters; this in turn causes an increase in taxi fares for others

• SMMEs who support restaurants (bakers, farmers, small wholesalers, bookkeepers) lose income

• Retailers suffer

• More stores close down

• Landlords find themselves with empty properties

• Many centers are owned by pension funds which exacerbates the reliance on government pension contributions

• Crime increases.

Of the estimated 15,000 sit-down restaurants in South Africa (Euromonitor 2017), only 1,500 are part of a franchise group; the majority are entrepreneurs navigating this devastating crisis alone.

Based on ruinous revenue losses related to government-ordered closures, economic realities, and projections, the sit-down restaurant industry’s survival is dependent on a targeted collaborative response. An unprecedented crisis of this scale requires that we work together.