Food at the Five Flies resturant, which was forced to close down recently. File photo: Mxolisi Madela

Cape Town - Small businesses are being forced to shut down or leave the city centre and operate from elsewhere because of climbing costs, say owners and a city labour lawyer.

Yesterday Jo-Ann During, who owned the Five Flies restaurant in Keerom Street for years and who had to close it down a few weeks ago, told the Cape Times it had become too expensive to operate in the city centre and issues, including limited parking availability, had hampered her business.

Labour lawyer Michael Bagraim, who was previously the chairman of the human resources portfolio in the Cape Town Chamber of Commerce, said: “Transport, electricity and staffing costs – these are the three big issues that are pushing (retailers’) backs against the wall.”

However, the Cape Town Central City Improvement District’s latest investment guide to the city centre launched earlier this month, painted a picture of a thriving business sector.

The report said there were 227 food and beverage venues and more than 1 200 retailers in the city centre.

It said that according to a series of surveys, the rates of businesses that were reporting declines in retail activity were dropping.

Retail space in the CBD stood at 94 percent capacity.

The report said 85 percent of retailers were satisfied with deciding to have a business in the city centre and 87 percent were confident they would still be operating in a year.

Yesterday During said she had no longer been able to keep up with the costs of running the Five Flies and closing it at the end of last month had been difficult. “It was hearbreaking,” she said.

During said factors that had played a role in her having to close included the economy and being unable to raise prices, which meant her profit margin had become less.

She said construction work in the vicinity of the restaurant and no parking available during the day had also affected business.

A store owner, who declined to be named and who had operated in the city for years until recently, said a number of his fellow shop operators found that renting premises was too expensive.

There was also stiff competition between stores.

Bagraim, who acted on behalf of about 1 000 small companies of which about 100 were based in the city centre, said based on feedback from his clients, retail business in the city centre had been down since Christmas.

An exception was Long Street, the iconic party strip, which attracted visitors at night.

But Bagraim said retailers in the street were not doing as well as they previously had.

“Another problem that we’ve got is jobless growth… It’s becoming one of the interesting phenomena of South Africa,” he said.

Bagraim explained that jobless growth was growing a business without employing people. This could be done by operating a business online.

Bagraim said many of his clients had become innovative in trying to sustain their businesses. One client, a jeweller who had operated a store in the city centre, had turned to “sales by word-of-mouth”.

Bagraim said this client relied on telephoning customers and going out to them instead of them having to approach him. “They’ve managed to cut costs,” he said, adding the number of staff members his client had employed was cut from eight to two.

Bagraim said if retailers kept leaving the city centre, it could one day become “a ghost city”.

Cape Times