The restaurant and retail sectors felt the full impact of Covid-19 this year with the closure of operations under level 5 lockdown. Photo: File
The restaurant and retail sectors felt the full impact of Covid-19 this year with the closure of operations under level 5 lockdown. Photo: File

Restaurants, retail feel sharp edge of Covid-19

By Sandile Mchunu Time of article published Dec 18, 2020

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DURBAN - The restaurant and retail sectors felt the full impact of Covid-19 this year with the closure of operations under level 5 lockdown.

The sectors saw stores closed, crushing their ability to generate revenue, particularly in the first five weeks of hard lockdown.

Listed restaurant groups, Spur Corporation and Famous Brands, reported a large decline in sales due to the closures.

Spur reported a 21.7 percent decline in total sales to R6 billion for the year to end June, hurt by restrictions in the last four months of its financial year.

Spur’s South African sales decreased by 22.3 percent, while sales from international restaurants fell by 16.7 percent.

The group pointed to restrictions in South Africa as having the biggest impact on its trading performance as local restaurant sales represent 88.5 percent of the group’s total sales.

South African restaurants stopped trading at the beginning of the nationwide lockdown on March 27.

Famous Brands also fell into an operating loss of R110 million in the six months to end August, reversing an operating profit of R376m reported a year earlier.

In South Africa and across leading and signature brands, its combined system-wide sales declined 51.2 percent while leading brands’ system-wide sales declined 48 percent and signature brands’ system-wide sales fell by 70.1 percent.

Famous Brands chief executive Darren Hele said while the performance was disappointing during the year relative to historical performance, the results were a commendable achievement in light of the prevailing environment.

“According to the report published by Statistics SA in September: SA restaurant sales were down 100 percent year-on-year in April, 97.7 percent in May, 87.7 percent in June, and 75.9 percent in July,” he said.

Restaurants were allowed to trade again on a delivery-only basis from May 1, with collection service permitted from June 1.

The easing of trading restrictions allowed the restaurant sector to earn much-needed revenue with Spur announcing its South African restaurants traded at 73.8 percent of the prior year’s turnover, improving from 36.5 percent recorded in July and 56.7 percent for August.

The retail sector also felt the harsh realities of Covid-19 as consumer spending dropped and unemployment continued to rise.

Mr Price reported a 24.8 percent decline in earnings for the six months to end September, due to its reporting period falling under the trading restrictions.

However, its earnings increased 6 percent after Covid-19 restrictions were eased.

A positive trend for the retailers saw most companies reporting a surge in online sales, with Mr Price’s online channel increasing by 71.5 percent from May.

Spar Group’s performance was muted during the year, with sales up by 4.8 percent during the 48 weeks to end August compared to 12.4 percent a year earlier.

Statstics SA reported a 50.4 percent decline in retail sales for April under level 5 lockdown, compared to the same month last year.

However, the opening up of the economy saw retail sales increasing by 1.1 percent in September.

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