Big shift hitting restaurants and takeaways in South Africa

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.”

 

 

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.”

Source: BusinessTech – www.businesstech.co.za

 

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