FEDHASA CAPE SEEKS TO OFFER BALANCED PERSPECTIVE ON RESTAURANT CLOSURES AND HOSPITALITY SECTOR IN GENERAL IN FACE OF GLOBAL ECONOMIC CRUNCH

In the face of the global economic crunch, FEDHASA Cape is fielding numerous media enquiries regarding the recent closure of several top Cape Town restaurants.

FEDHASA Cape is the Western Cape and Northern Cape branch of the national FEDHASA lobbying body cum watchdog for the South African hospitality industry.  Given that its Board is represented by individuals working in key grassroots level positions within the Hospitality sector,  the organization seeks to offer balanced perspective on issues for which commentary is sought.

FEDHASA Cape Chairperson Phillip Couvaras and Vice-Chairperson Rey Franco make the following observations in terms of the current state of play within the Restaurants sector:

• Historically, there is a trend for restaurants to open and close in Cape Town post- our  peak season.

• The current decline in international tourists is a result of the global economic downturn, and coupled with a drop in local consumer spending, these are the key factors that have facilitated the latest round of restaurant closures.

• Patrons are now more careful when selecting dining options.  Decisions tend to be based on genuine value for money and friendly, efficient service.  Typical ‘comfort foods' such as shepherd's pie , lasagna and pizzas are popular choices as they provide good value for money for families. 

• Wine purchases appear to be more selective, with less volume consumed while simultaneously not compromising on quality.

• International and locally, business expense accounts are being scrutinized - at least for the immediate future.  For most companies, expense allowances have either been slashed or are now vetted. More importantly , companies simply cannot afford to be seen allowing their executives to run up large restaurant bills, while back at headquarters, major cost-cutting and / or staff retrenchment exercises are underway. Those venues whose core business is this customer need to now diversify rapidly - or face the same fate of some recent outlets.

• Hotel restaurants are feeling the biggest impact, given that traditionally the visitation to these is lower than the high street venues, thus a downward trend means they are really haemorrhaging from a financial perspective.

• With the Cape winter approaching and the European summer, the forecast remains bleak and the expectation is that more closures may follow prior to year end.

• The pressure on the industry will remain until at least the second quarter of 2010.

• Restaurant operators who are planning to open new restaurants must be cautious and intelligent decisions must be made reading their target market and positioning. Skill is required with regard to products, supplier price negotiations, and payroll management. From a service delivery angle, delivering exceptional customer service consistently should be at the top of their list.  This is probably the single most important thing anyone can do, yet not the easiest.  This same principle applies to existing operations.

• The closure of a restaurant impacts a wide range of people. The owners and staff take the consequences first and must begin job searching; however, the suppliers of food and beverage, the landlords, the council and all other people who supply services to or for the venue lose out on an income stream.

• Restaurant operators are encouraged to belong to an organization such as FEDHASA Cape, where they can receive support, up-to-date information on trends and changes to legislation, as well as use the member network and share ideas and strategies.  FEDHASA Cape has extended an invitation to work more closely with RASA (The Restaurant Association of South Africa) in the Western Cape in order to combine resources to provide higher levels of support to operators. FEDHASA Cape has allied members as well.  In other words, membership is not only about rooms, food and beverage.  These allied members, who comprise a broad range of consultants, provide product and services to FEDHASA Cape members, ranging from banking to legal and recruitment consulting. 

"Couvaras concedes that while international arrivals into South Africa are significantly down Cape Town and the Western Cape will remain a favorite destination.  FEDHASA Cape has no knowledge of any unprecedented levels of retrenchments or lay-offs within the Hospitality sector at this stage.  There have been reports of a few hotels rationalizing employment levels in line with declining occupancies along the Garden Route. It is certainly true that the months ahead will prove extremely challenging for the hotel, restaurant and tourism industry - indeed perhaps the most difficult in the last 20 years. There will no doubt be some casualties as we head into 2010 and the World Cup Soccer events." 

"Concerning is that there are a number of new hotels coming in line," he explains, "that will add new supply into a market that is showing declining occupancies and rates, so that will compound an already poor trading environment and may lead to hotels having to take tough decisions wit regard to operating expenses as well as employment levels as we go into the coming months"

Looking ahead, Couvaras says that the 2010 World Cup Soccer is not expected to be affected by the global situation.  "It is the first time AFRICA is hosting this event & South Africa in particular is an excellent aspiration destination. As such, it is expected that people will make the extra effort and travel thereby showing support for Africa in general. The flight from Europe is direct and there is no jet lag," he says.

Couvaras explains that, for its part, FEDHASA Cape aims to assist its members in strategies that minimise costs, facilitate marketing and retain jobs for its employees at all times.

Since its establishment in 1949, FEDHASA has become known as the lobbying body and watchdog for the Southern African hospitality industry locally, nationally and in all tiers of governments on tourism, legislation, trading conditions, taxation, education and related industry issues. The association services 5 segments, i.e. hotels, small accommodation, restaurants and catering, suppliers of products and services to the industry and now also a Youth segment.

For any further enquiries, please visit http://www.fedhasacape.co.za/ / http://www.fedhasa.co.za/, e-mail fedhasacape@fedhasa.co.za, or call FEDHASA Cape on (021) 552 9870.