Founder: Turnaround Talk
We are all aware of the disruption that restaurants faced at the hight of Covid. This has carried over into the Post Covid Recovery. How do restaurants fit into an environment that is already facing significant disruption?
Business Tech recently published an article which discussed this in detail.
Key Growth Trends
After more than two years of Covid restrictions and increased demand, South Africa’s restaurant and takeaway sectors are seeing a structural shift, says John Loos, property sector strategist at FNB.
The data points to three key trends emerging:
- Growth in the overall Restaurant, Take-Away and Catering Sector is showing signs of slowing, albeit still solid in recent times. “This has been expected, firstly due to the normalization of activity following lockdowns having more-or-less been completed,” Loos said.
- Negative economic events are starting to force consumers to reprioritize their budgets – partly at the expense of eating out and takeaways. “These (economic) events include rising general inflation, especially in the area of petrol prices, as well as rising interest rates, and a slowing economy constraining household income growth,” Loos said.
- There is a ‘structural’ shift towards a greater take-away/fast food/convenience culture, also probably boosted by the improved delivery capability of many outlets. Post-Covid 19 lockdowns, consumers appear far more about convenience and speed, and take-away/fast food outlets cater more for this, loos said.
- “The sharply weaker performance in sit-down restaurants and coffee shops since prior to Covid-19 has arguably put retail centres with a greater focus on this at a relative disadvantage. A focus on the Fast Foods and Take-Aways category through the Covid-19 period appears to have been significantly more advantageous.”
Photo By: Mall of Africa
Solid performance
Despite a slowdown in spending in recent months, the growing take-away and fast food data for May 2022 points to ‘solid but slowing’ growth in tougher economic times, Loos said.
This comes after the take-away and fast food sector made huge inroads through the lockdown period, he said.
“Take-away and fast-food outlets’ incomes have massively outperformed Restaurants and Coffee Shops, as well as the Catering, category. Real income of the Take-Away and Fast-Food category is a strong 37.4% up from May 2019 in real terms.
“Restaurants and coffee shops, by comparison, are -29.2% down in real terms from May 2019, while Caterers are an even more extreme -38.4% down over the same period.”
The role of turnaround professionals
The task for turnaround professionals is to sit with restaurants and map out how they see themselves fitting into this world of disruption. They then need to come up with an actionable plan to make sure that value s added to shareholders.
