SA’s food and beverage sector battling to rebound after pandemic, lockdown measures

26 Sep 2022

Restaurants and cafés were vulnerable to the Covid pandemic and they are still struggling to recover from the trail of business destruction and jobless misery.

The food and beverage sector in South Africa was absolutely hammered by the Covid-19 pandemic and the lockdown measures to contain it. This has given rise to a roller coaster ride of stomach-churning ups and downs and, disconcertingly, income generated by the sector remains well below pre-pandemic levels — with the glaring exception of fast food and takeaways.

South Africans, many of whom like to eat, drink and be merry, are still not doing so with quite the same gusto as they did before the pandemic.

This is the picture that has emerged from the monthly data on the industry published by Statistics South Africa (Stats SA), and the latest numbers, unveiled this past week for July, are stark.

July last year was marked by several major events that directly affected the sector: the first was the wave of rioting that swept KwaZulu-Natal and Gauteng. Many shopping malls were looted in that lethal spree of violence that killed at least 350 people, and such establishments have plenty of restaurants and cafés. And the final round of alcohol prohibition — a policy with a racist and classist history driven by the Cabinet’s social-control freaks — was only lifted near the end of that month.

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So, in July this year, income generated by the food and beverage sector soared by 55.8%, the biggest annual increase so far this year. Income from restaurants and coffee shops surged by 82.6%, and bar sales were 81.6% higher.

Takeaway and fast-food outlets posted a more modest annual income growth in July of 32.0%. But, overall, this branch of the wider industry has now regained all the ground it lost during the pandemic, and then some, whereas the other two broad subsectors — restaurants and catering services — remain below pre-pandemic levels of income.

These trends can be clearly seen in the graphic below.

These diverging fortunes stem from the lockdown legacy of the pandemic. Fast-food outlets with takeaway options did not face the same level of restrictions for much of the pandemic in 2020 and 2021 as other subsectors. And even when you could sit down in a restaurant, many adults chose not to, because they like an adult beverage with their meal.

Fast food is also cheaper and so the swing towards it is probably a reflection of consumer preferences when disposable income is in decline. And many such establishments are franchises — Wimpy, Steers, KFC, etc — which are backed by large companies with pools of capital.

Restaurants and cafés, by contrast, were far more vulnerable to the whims of various Cabinet ministers, whose ill-conceived policies left a trail of business destruction and jobless misery in their wake.

Many such businesses, often owned and operated by individuals or families, suffered as people opted to avoid them because of the expense or the fact that they wanted a bottle of wine with their Sunday lunch. A lot of these businesses went under and are not coming back.

The third broad food and beverage sector, catering, was also waylaid by the lockdowns and remains well below its 2019 levels. Restrictions on the size of gatherings obviously hurt, and its sluggish recovery is probably explained by factors such as companies downscaling functions because once a cost is saved many a number-cruncher wants to keep it that way.

As a whole, food and beverage income at constant 2019 prices in July of this year was R5.75-billion, compared with R6.3-billion in the same month in 2019, with the gap mostly closed by the fast-food sector.

This is concerning on a range of fronts. The sector is labour intensive, so many people lost their livelihoods when restaurants closed. Small businesses bore the brunt, shattering the dreams of hard-working entrepreneurs. And if South Africa is becoming a “fast-food nation”, that is probably not the healthiest trend for eating out. The sector and the country are still paying a high price for the pandemic. DM168

This story first appeared in our weekly Daily Maverick 168 newspaper, which is available countrywide for R25.

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