The new restaurant conundrum: starting up in SA’s current economic climate

We are flooded by a deluge of bad news every day. Increasing inflation, rising interest rates, shrinking disposable incomes, escalating food prices, the energy crisis; all of this culminating in poor investor sentiment as South Africa grapples with being regarded as an unattractive investment destination. Ironically, the rapid pace at which new restaurants are opening up proffers the question as to the business decision to open an eatery in the current climate.

The post-COVID boom

While the COVID-19 pandemic saw thousands of restaurants shut shop, some have re-opened and several new restaurants have sprung up in their place, pandering to the increase in the number of patrons dining out again post-COVID.

“Many restaurants closed during COVID and we are seeing some innovative and specialty restaurants opening up, run by brilliant chefs and entrepreneurs who get the recipe right. We are a brave and tenacious industry filled with incredible people who do not give up,” notes Grace Harding, chairman, The Restaurant Collective (TRC) and group CEO, Ocean Basket.


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“With many people still working remotely, restaurants double up as co-working spaces, as well as a place to enjoy a great meal with friends or family in a lively ambience with an entertainment element. The increasing load shedding has also led to more people dining out during the week. These factors present an opportunity for restaurants to cater to patrons throughout the day,” remarks Wendy Alberts, CEO, Restaurant Association of South Africa (RASA).

Moreover, despite the higher cost of living, people need a reprieve from their monotonous daily routine and dining out provides an affordable way to do that.

There is also the high-income bracket of consumers who are not really impacted by inflation and continue to dine out regularly. “Many of the new and exciting concepts we are seeing target the higher-income groups, and some are starting restaurants with simple menus, small space and less complexity.  Something we learnt during COVID, which is definitely benefitting us now,” explains Harding.

Opening a new restaurant in areas frequented by such customers thus makes complete business sense. “We are fortunate to have a prime location in Rosebank where we see a steady stream of well-heeled clientele who dine out regularly. Besides, having two other successful restaurants ­­– Proud Mary and Mamasamba ­– in the same area, gave us the confidence to start a third one,” avers Marco da Costa, senior manager, Fugazzi, which opened in Johannesburg this March and is part of the Colada Hospitality Group.


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However, patrons have become more mindful while eating out. “I believe that people are being more cautious when it comes to dining out due to the inflation rates. They are being more selective about where they spend their money, choosing restaurants that offer memorable experiences that go beyond just the food, and include a great vibe, service and atmosphere,” states David Higgs, partner, Marble Group. Marble restaurant is set to open in Cape Town early next year.

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