EDITOR – At some point in the past month many of us have visited an eating establishment like takeaways, delis, cafes and the like and with the rising cost of living there’s less disposable income to spend on such luxuries but the fast food industry in South Africa is booming recording a R302 billion turnover in the past year and has been growing at the rate of 11.7 per cent with 4 552 outlets employing some 325 000 people.
However, this cannot be said of the sit-down restaurants which have been on the decline in recent years growing sluggishly, at the rate of 5.4 per cent and this has been more pronounced in the western world as a consequence of the 2008 recession.
This is a difficult comparison to make but just for the sake of continuity, a good example would be providing statistics on New York City (NYC), which has population of 8, 491,079 in 2014 with 24 000 eating establishments, employing some 801 500 people and turning over $27,8 billion in 2015 and it has been reported that they are on the decline in terms of profitability. The food and beverage industry in the USA is the second largest employer. A similar comparison of the whole of South Africa reveals employment of 186 103 in sit down restaurants and 325 000 in the fast food sector, with our total population of 55 million and 15 252 restaurants and fast food outlets turning over R3,7 trillion (SA Stats not absolutely 100 per cent).
In the past week I sat at a 200 seating restaurant in the Gateway mall and there were two tables occupied with a total of 4 adult patrons, 12 waiters and two managers excluding the kitchen staff and bar staff. Because it was very quiet I got to chat with the manager and established that the restaurant needed to make at least R25 000 per day just to cover its operational costs ie. rent, salary bill, electricity and so forth.
My immediate reaction was to question why a restaurant that was a fairly busy one has declined and his immediate response was “go to the food court” which summed up how trends have changed. For one its cheaper and secondly there is no need to tip. A example that I used after doing the calculation with him was the cost of a cup of tea – which came to R1.20 and regular Americano coffee at R3.65 but the menu has it priced at R18.00; a basic 200g beef burger and chips which came to R12.50 and its on the menu at R79.00 a single KWV brandy costs R5 a shot is priced at R30.
Restaurants are forced to hike their prices purely because their operational costs are too high and these costs have to be passed onto the customer. The consequence of their over-pricing has moved patrons away and driven them to the food court. Upon leaving the restaurant I proceeded to check out the food court just to see for myself and for sure one had to look around for space.
With so many restaurants up for sale and with so many new ones appearing I believe that it should not be business as usual but the proprietors should re-invent themselves and re-examine the costing models with a view to bringing back the customers lost to the fast food industry.
Sicario
Durban
