Coronavirus fallout: Beginning to bite restaurants
Amid a stalling economy and Eskom load-shedding, SA’s restaurants were already taking strain. The fallout from the coronavirus outbreak may push many over the edge
Before the Covid-19 outbreak, the R29.99 "recession breakfast" was the top-selling item at his restaurant, says Jack Landon. "Now even that isn’t selling anymore.
" If that doesn’t illustrate our situation, I don’t know what will."
Landon is the owner of Spilt Milk in Joburg’s bohemian suburb of Melville. In better times, it was a vibrant, bustling eatery — a haven for students, hipsters and others. But, like the rest of Melville’s famous 7th Street, it now resembles a ghost town.
Walk in there today, and the sight of vacant seats and eager waiters armed with hand sanitisers is arresting. Struggling to cope already, Spilt Milk, like all restaurants across the country, will have to shut its doors for 21 days as part of President Cyril Ramaphosa’s national lockdown.
Many may not survive. Already from March 15, when Ramaphosa declared a state of disaster, business began vanishing.
Says Landon: "Last week we were fine [but] after that speech things went from bad to worse. We realised that in two months we might not even break even, as we’d experienced a 50% drop in revenue over four days."
Dino Vlachos, owner of Greek-style street-food restaurant, Soul Souvlaki, says the day after Ramaphosa’s state of disaster speech, he saw an immediate 70% plunge in sales.
"There are fewer people coming into our six stores, but fortunately we do deliver, so that helped bring in some business," he says.
It didn’t help that co-operative governance minister Nkosazana Dlamini Zuma then put out an order prohibiting alcohol at taverns, restaurants and clubs after 6pm, while limiting capacity to 50 people.
Landon says he hasn’t seen 50 people in his restaurant for days. "No-one comes through our doors. We are lucky if we get 50 people a day."
It’s a script playing out all over the world. Eateries in France and Italy, two countries famous for their cuisine, have been closed. In the US, the restaurant industry asked Congress for $455bn in aid to help it weather the virus, and retain the 7-million jobs at risk.
Louise Castle has been running restaurants like Bellagio, in Joburg’s northern suburbs, for 25 years. But since Ramaphosa declared a state of disaster, business has dropped 65%-70%. "It’s mind-blowing," she says.
Until the lockdown was announced this week, Castle had made a plan to cope. Bellagio retained its normal menu, adding family-style comfort meals such as soups, casseroles and curries, which were delivered free of charge to nearby places.
Castle was prepared to spend all day driving around making deliveries if necessary. "I’m not going to make money, but I need to pay rent and staff (some of whom have been with me for more than 25 years)."
With 30 staff reliant on her, she had no options. And everyone pitched in, with those waiters who had cars being called on to deliver food too.
"If there are another 10,000 establishments like me in SA, plus their suppliers and dependants, the closure of these restaurants could affect the livelihood of about 1.5-million people," she tells the FM.
Coronavirus, of course, isn’t the only challenge restaurants across SA have faced. With Eskom unable to keep the lights on, Castle had to spend R300,000 to buy a generator.
But it is the virus that might have the last word. An industry that has traditionally survived on wafer-thin margins, where waiters rely on tips to support their families, has now been forced to shut its doors for who knows how long.
Even top-end eateries are struggling. Before the lockdown, acclaimed chef Luke Dale-Roberts had closed his restaurants: the Test Kitchen, The Pot Luck Club, The Shortmarket Club and Salsify at The Roundhouse.
Marble and Saint, two of the trendiest restaurants in Joburg, owned by chef David Higgs and Gary Kyriacou, also closed last week.
Some enterprising restaurateurs initially adapted to the change — until the lockdown put paid to that.
Larry Hodes, a 30-year veteran of SA’s restaurant industry, owns three restaurants: Arbour Café & Courtyard and Voodoo Lily in Birdhaven, and Calexico in Auckland Park.
"Everything’s moving so fast," Hodes says. "I’ve had to take quite dramatic action in terms of staffing — we have reduced the number of shifts and the number of hours per shift."
But Hodes was able to adapt quickly. As luck would have it, he’d been planning to launch The Dark Kitchen, which makes food only for delivery, with no restaurant to sit in, for years. Last week, he launched it.
"The response has been great," he says. Arbour and Voodoo Lily also began adding curbside pickups for customers to collect their orders in person. It’s a trend many restaurants followed.
Bold though they were, these initiatives were a Band-Aid over a gaping wound. While banks agreed to either give payment holidays or help customers with extra loans, the problem for many restaurants has been the landlords — many of whom have yet to agree to a rental freeze.
Nico Brandt, owner of Cut & Craft Bistro in the Joburg suburb of Kensington, says profit margins were waning, even before the virus hit.
"From landlords to banks we all need to say: ‘Let’s try find a midway point to assist.’ Even if we pull out all the stops, for small business operators the reality in SA is a problem. We have no support or direction from the government," he says
Restaurants like Marble can afford to close for a month, as they have deeper pockets, says Brandt. But "99% of smaller businesses can’t sustain closing even for a week".
Containing the fallout
The last thing the restaurant industry needs is a total lockdown, says Wendy Alberts, CEO of the Restaurant Association of SA.
"We have a huge responsibility to keep people employed. Their health and hygiene is important, and we are committed to finding solutions to engage with the government," she says.
The association represents virtually all restaurants across SA, with the average restaurant employing about 20 people.
And restaurant owners have adapted as best they can.
For example, Alberts says some restaurant owners have upgraded their credit-card machines to a tap-and-go system "because of the huge amount of evidence that the virus is transferred through cash and credit cards".
On Tuesday, Alberts met tourism minister Mmamoloko Kubayi-Ngubane. "The minister has encouraged restaurants to take responsibility," she says. "If we don’t act responsibly now, how many more months will it be?"
Alberts says restaurants stand in stark contrast to retailers, which are making a killing as skittish South Africans panic-buy trolleys full of groceries. "We have been crippled and have received no support from the government," says Alberts.
The shutdown will make things even more unbearable: everything will have to be closed — even takeway meals, which many restaurants have been providing until now, are forbidden.
The inevitable result: jobs lost.
Vlachos has already had to let go of about 20% of Soul Souvlaki’s casual staff. "Our business is definitely not profitable at this point. Based on the level our business is operating, it is almost impossible to cover our responsibilities," he says.
To cope, Spilt Milk has done something a little different. It started a crowdfunding initiative — "Coronavirus plea for help" — to help it cover costs for the next few months. Landon hopes this will buy the restaurant time to find a solution before it goes under.
"When we started the crowdfunding, there was an element of wanting to pull at the heartstrings because it’s not just my life and business that is affected, but these guys [the staff] who are family breadwinners," he says.
When it started on March 19, the initiative set a target of R100,000. By March 24, it had got to R10,000.
It’s one example of the ingenuity in the restaurant industry. But it may not be enough. At this stage, it’s an industry crying out for someone to notice how badly it has been hurt.