Restaurants in South Africa are still struggling to return to pre-Covid-19 revenue source grades; However, it is evident that a change in gastronomic behavior induced by the pandemic is diminishing in the fast food sector, which is booming.
The latest food and beverage statistics from Stats SA show that, measured in real terms (constant 2019 prices), the overall profit generated by the food and beverage industry increased by 18. 6% between September 2022 and September 2021.
While the main contributor to the 18. 6% year-on-year growth remains from restaurants and cafes, the sector remains at levels seen before the Covid-19 pandemic in 2020/2021.
Fast food, which contributed less to the sector in general, temporarily returned to the generality and even exceeded previous levels.
The sector as a whole appears to have a complicated path to recovery. Total sales in September 2022 were R5. 6 billion, only 85% of the R6. 5 billion recorded in September 2019, but still showing a general upward trend.
Restaurants earned 2. 6 billion rand in September, less than in August, while fast-food and takeaway businesses reported profits of 2 billion rand for the month.
Sales of food and places to eat are also boosting revenue in similar sectors, with the accommodation sector also posting sales of R630 crore from R3. 9 billion for the month.
Big changes
South Africa is undergoing a broader shift toward one-position dining, quick-service restaurants and takeaway, a trend that hasn’t gone unnoticed.
Analysts pointed to a developing “structural” trend towards an increased takeaway/fast food/convenience culture in the country, which has most likely been driven by improved delivery capacity at many outlets during the Covid-19 pandemic.
After Covid 19 lockdowns, consumers seem to be much more involved in convenience and speed, and takeout/fast food is responding more to this.
While the upgrade part is service-driven, consumers are also increasing financial pressure due to economic headwinds, making them much more complicated when it comes to how and where they spend their money.
According to ETF strategist John Loos, negative economic events will force consumers to redefine their budget priorities, in part at the expense of dining out.
“These (economic) occasions come with emerging headline inflation, especially in the dominance of oil prices, as well as emerging interest rates, and a slowdown in the economy that is restraining the household source of income growth,” he said.
Red flags
Despite more moderate functionality for restaurants and cafes, Bureau of Economic Research (BER) research on sector knowledge in the third quarter shows that the hospitality sector, overall, is on track for recovery and this momentum is expected to continue. line until 2023.
The last quarter of the year is sometimes working very well for the sector, contemplating the largest number of travelers and tourists traveling to various parts of the country, as well as spending the Black Friday holiday season and holidays.
There are red flags, however, for Nedbank economists.
Data released by Stats SA in early November showed real retail sales rose 0. 6% year-on-year, compared with a 2. 1% increase in August. This functionality has been weaker than market expectations, indicating that South African consumers remain under pressure.
“Retail will recover compared to September in the coming months as consumers take advantage of Black Friday promotions and maintain higher spending levels in the holiday season,” the bank said.
“However, volumes are going to be particularly higher than in the same era in 2021, as demanding emerging price situations, gloomy labor markets and tighter monetary situations reduce available earnings and weigh on customer confidence. These situations will continue to reduce retail sales in the New Year. “
Read: Black Friday South Africa 2022: All sales this week
Subscribe to our newsletter