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Restaurants and pubs, the harsh reality of business during lockdown

Newcastillian
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On Saturday evening, 15 August 2020, South Africans received the news that our country would now be returning to some form of normality.  Seeing alcohol and tobacco products being given the green light, yet again. 

Like many South Africans, who woke up today (18 August 2020), drove to a shop and bought cigarettes or alcoholic beverages, like nothing had changed. I was personally excited and concerned all at the same time. 

My excitement stemming from the obvious elation for the resurgence of some form of democratic normality in our broken country. However, my excitement was soon overrun with concern. The thought of how much carnage has been endured by some of the largest industries and sectors in our country, for no apparent or logical reason. 

Yes, we have a global pandemic, but was negatively impacting millions of jobs and countless businesses, plus the economy, the way forward? 

As the lockdown regulations have now been eased, what is this negative impact? The Newcastillian – Online Daily News, got the rundown from business owners in the hospitality sector. Ranging from a franchise owner to a local bar owner, as well as a partner in a privately owned pub/restaurant.  The answers from these three fearless entrepreneurs should give you some insight into their harsh reality. 

This is what they had to say:

Conrad van Rooyen of RoccoMamas explains the first phase of the lockdown was expected to be less of a challenge than it ended up being. 

“We had planned to close for only 3 weeks, and the extension of the lockdown caught the hospitality industry off guard. This extension resulted in stock loss, as well as other challenges associated with prolonged closure.”

When looking at the loss of income and clientele, Conrad explains the loss was massive.

“The lockdown and associated pandemic caught a bewildered customer base completely off guard. Business interruption amounted to many hundreds of thousands of Rands, and eventually into seven-figure losses.”

The stock loss that RoccoMamas experienced amounted to tens of thousands of Rands in expired stock, which needed to be discarded. 

“We traded at between 30% and 40% of our regular trading patterns. Income was reduced to a mere trickle, allowing us only to cover certain costs and overheads.”

According to Conrad, the second phase of the lockdown began to visibly hammer the proverbial nail into the coffin of the hospitality industry. 

“The restrictions placed on alcohol sales, during the short period that it was permitted were ridiculous, to say the least. Being allowed to sell alcohol only Monday to Thursday, and only until 5pm, had no positive effect on business, as our customers were at work during those hours.”

Furthermore, as a franchise owner who employees local people, Conrad elaborates on how the lockdown regulations negatively impacted his staff compliment. 

“With the massive reduction in customers and in turnover, we have had to adjust our staffing compliment accordingly.  We have been fortunate in that the Government has provided for TERS payments for staff who have had to be side-lined by the lockdown. The challenge now being, TERS assistance expires soon.  This will present new challenges to employers in the hospitality industry,” Conrad explains.

While South Africa has been moved to Level 2, how long does Conrad think it will take for restaurants to start generating a profit again?

“It will take a very long time for business to recover. Many restaurants find themselves in severe debt.  All this debt will need to be cleared and paid first. Once this happens, businesses may begin to trade at a breakeven.  Only after that can any business again look towards profitability.”

As with other establishments, there are several challenges which Conrad and his team must now address.

“Regaining consumer confidence is our primary objective.  We want our customers to know that we provide a safe and compliant environment for them in which to dine.  We understand this is a slow process but are beginning to appreciate the trust the public has placed in us to afford them this safe environment.”

Conrad goes on to highlight, the restaurant sector (specifically Brand restaurants) have always been leaders when it comes to health and safety protocols. 

“We have been adhering to stringent protocols and daily quality coupled with hygiene procedures for many years.  It is therefore unfortunate to see the restrictions that have been enforced on the restaurant sector.”

During the current economic climate, Conrad is thankful that RocoMamas is part of a franchise, highlighting it has assisted them greatly.

“The guidance and support offered by the franchise company has been invaluable. This is a learning curve for all of us, and we have managed to put our heads together and work together to find a way forward,” he concludes.

Norbert Kade of the Pint & Pigout agrees with Conrad in that the first phase of the lockdown was expected to be less of a challenge. When the lockdown lasted longer than three weeks and more restrictions being implemented, the Pint & Pigout began to start facing an array of challenges.

As a restaurant and pub, Norbert explains that alcohol and food make up 50/50 of its sales.

“Therefore, when we were allowed to take sit-ins, it was not viable for us to open. People come here for a good time and for a few beers. We went as far as to do a poll and survey to determine whether people would be willing to come if we re-opened for sit down meals.”

Norbert explains that a staggering 70% of the poll participants stated they would not come to the Pint & Pig during the pandemic. A further 20% said while they would like to come, it wasn’t feasible as they could not enjoy an alcoholic beverage with their food.

“A number of people, both young and old, also explained that they were too scared at the moment,” he highlighted.

Suffering extensive financial losses on sales, Norbert adds that he also saw major losses in stock, with the bulk expiring.

“We tried to do takeaways, but that isn’t out market. In order to generate an income and to be proactive, we made our pies, which stores such as Pick n Pay then sold for us.”

In terms of their staff compliment, Norbert says his business partner, Cathy Kade, was astute with the necessary planning.

“Cathy ensured the UIF was paid and we were fortunate to be in time to apply for the TERS funding, ensuring we were able to support our staff.

However, he says it is difficult to establish just how long the staff can be supported during these trying times. Norbert explains that both he and Cathy have been open with staff, holding regular meetings with them. “We intend to keep our staff for as long as possible,” Norbert stresses.

Currently, staff have been put on short time due to the establishment not having the necessary funds. However, no staff will be retrenched in the immediate future.

Looking to the future, Norbert says he does not envisage business bouncing back for at least a year and a half. “We all know what this pandemic has done to the economy.”

As a privately owned establishment, this beloved local pub owner feels that franchises have an advantage during these trying times.

“Franchises have their names and backing. The Pint has a name in Newcastle, but it is due to the longevity of the establishment and its service. But out of towners are not always going to come here,” he highlights.

As no stranger to the hospitality industry in Newcastle, Norman Forbes of Melos elaborates that the first phase of the lockdown hit his establishment hard, with him facing a complete loss of income.

“It was a total shock to the system and the second phase was even worse. Especially as alcohol contributes to 70% of our income, with food only contributing to 30%.”

While not being able to generate a steady income, Norman says he was fortunate in that he did not suffer much stock loss throughout the lockdown period. Largely due to him being prudent and not ordering stock until he knew what the government’s plans were.

However, his staffing compliment took a substantial knock. “Prior to the lockdown, we had 11 staff members. We are now down to six staff.”

Looking to the future, Norman says Melos will only be able to break even within the next year. This is largely due to the financial implications caused by the lockdown.

“Personally, the lockdown has hit me emotionally. A person does not know where the end is and the worst thing is, you cannot prepare for it under the circumstances. You just have to try and keep going, without earning an income. Furthermore, the lockdown has been the worst time in my life, as I also lost my wife.”

Enduring great suffering on a personal front, while trying to wade through the effects of the lockdown, Norman says he has tried to remain positive.

“On a positive note, we were able to do a total revamp of Melos during this time. We have also jacked up our pizza deliveries during the lockdown.”

Unlike Conrad and Norbert who feel being a part of a franchise does give your business an advantage, especially in times like these, Norman says, he is thankful that his establishment is not part of a franchise.

“During these times, I think it is easier not being part of a franchise, as there are no royalties and fixed costs which need to be paid,” he stresses.

After chatting with these three loved Newcastillians, it became quite clear, that the hospitality industry across SA is in a worse state than what the average Jane or Joe, is taking into consideration. As a community, but mostly as people who have all endured this chaos. We need to help this vital sector within our community to bounce back. And the only way to do this is to go enjoy a wonderful meal at one of these local establishments, with an ice-cold beer, all while puffing on your favourite, legal, cigarette.

Author: Quinton Boucher

Edited: Calvin Swemmer

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