From having contributed R6 billion monthly to the national economy and employing more than 500 000 people last year, the Covid-19 coronavirus has resulted in many once-bustling restaurant businesses having to fight for survival.
Yet despite being one of the hardest hit industries, the latest Fitch SA Consumer and Retail Report estimates that 40% of restaurants have not received any form of government loan or support. Unfortunately, these figures may be on the conservative side.
Firstly, employment in the industry is typically unstable, with most restaurants employing only their front-of-house and kitchen personnel permanently. Because wait staff and other roles are typically filled by casual workers, while a business can only base its employment statistics on permanent staff, it is difficult to prove economic impact in terms of employment when applying for finance.
Secondly, and arguably most importantly, it is often difficult to prove the financial viability of a restaurant.This is either because the restaurant’s financial information – balance sheets, profit statements and so on – is not readily available or up-to-date, or, if it is, many of these businesses have been running at a loss over the past financial year. This is because the South African restaurant industry has been through a rough few years.