Hospitality Sector Tentatively Recovers After Relaxation Of Curfew And Booze Ban

Since my previous article last month, the hospitality sector has been given a break. Thanks to the revised curfew and relaxation of the alcohol ban announced on 1 February, the entire sector has seen an uptick of between 15% and 20% (and counting) every weekend.

These relaxations came into effect the very next day, which is a clear acknowledgment of the damage being caused to the sector because of the strict curfew and alcohol ban. With South Africans suffering from cabin fever and applauding the eased restrictions, restaurants are now welcoming patrons for the dinner trade, which is critical for their recovery and survival.

However, we must understand that the easing of the curfew and alcohol ban is not because of the virus being less prevalent or dangerous, but rather the necessity to save the economy and not further contribute to the high unemployment rate that also plagues our country. So, it is vital for all businesses within the sector – franchise operations or others – to stick to and maintain all protocols now that customers are returning. Not doing so could cause the sector to become a ‘super-spreader’, leading to more restrictions once again.

From a banking perspective, we know that while the industry is showing welcomed signs of recovery, it does still carry with it the debt burden of trying to stay afloat when there was limited or no income. There is no silver bullet for this, and it takes time and stringent cashflow management to solve the issue. Four out of five businesses fail because of financial mismanagement, which could be further exacerbated by the current environment. Cashflow and expense management remain of vital importance, and businesses must work closely with all stakeholders and discuss repayment options of rentals, suppliers or loans.

As bankers, we choose to prioritise our clients, investing time to understand their unique position. Transparency and working together is key, and if ever there was a time for us to build everlasting relationships with them, it’s now. The second wave of Covid-19 affected each province differently. It is therefore more important than ever to have a financial partner who understands the local industry and unique regional situation – a partner who is willing to spend time in the trenches with clients to forge the way forward.

What has been heartening in my observations of the hospitality franchise sector over the past year is its tremendous resilience and camaraderie. Individuals (for example Wendy Alberts, chief executive of RASA) have built a family of restaurateurs who are now lobbying to help each other during this challenging time. This is what South Africa and the industry is all about: leave no man behind to brave the storm alone. I have seen more restaurateur relationships established in the last year than in my entire career. Anything from sharing equipment, finding the perfect supplier and promoting each other’s businesses – we’re doing it. Nowhere else in the world would you find more hospitable people than in South Africa’s hospitality industry.

Nedbank has a highly experienced, specialised division that fully understands the challenges and opportunities of the franchise sector. Talk to one of our business managers or email us at franchising@nedbank.co.za to find out more about how we can help you grow your franchise in 2021 and beyond.