More and more "To Let" signs are appearing outside Cape Town eateries as restaurants, coffee shops, take-aways and franchises go to the wall, industry experts have warned.
Auction companies said they had seen an unusually high number of restaurants and coffee shops go into liquidation.
In the past few months more than 20 restaurants have been either sold or liquidated. These include Summerville Restaurant in Camps Bay, the luxurious Show Room Restaurant in the city, foreign-owned 48 on Hout, Riboville in St George's Mall, and Madame Zingara.
A number of branches of franchise eateries and coffee houses have also gone belly up. These include branches of the Dros, St Elmo's, Cattle Baron, Sundance Cafes, Melissa's, the Cape Town Fish Market, and Wangthai and Vida e Caffe.
A Pricewaterhouse-Coopers survey showed that in Britain, the number of restaurant insolvencies has grown to 70 percent since the beginning of last year.
And chief executive of the Alliance Group, Rael Levitt, said that it was happening across South Africa.
"Cape Town has certainly become the culinary capital of South Africa and over the past five years there has been an explosion of restaurant openings."
But, he said, the group's Distressed Asset Index showed that restaurants and small franchises have been taking real financial strain in the downturn.
"It is a global trend and it is now very visible in the high streets of major European, American and East Asian Cities."
The global recession was triggered by the erosion of household budgets.
"Quite simply put, the average family and individual is poorer because their property and other investments have reduced in value. Eating at restaurants has become more expensive and this is a luxury many people can ill afford."
Many more "To Let" signs than usual have shown up in city windows.
City Partnership head Andrew Borraine warned that "we are going to see a lot more of these signs go up".
He foresees tough times ahead for the next 12 to 18 months. Usually there is a five to eight percent rate of vacancies in the city, but these had increased to 10 to 13 percent, while the vacancy period had increased from four to seven months.
Rising costs exacerbated the problem. A rates increase of 15 percent and an electricity hike of between 30 to 40 percent were imminent.
Borainne said they had set up an advisory panel with property and retail experts to advise struggling businesses.
Rey Franco of the Federated Hospitality Association of South Africa put the closures down to the decline in international tourists as a result of the global economic downturn, coupled with a drop in local consumer spending.
"The winter forecast remains bleak and the expectation is that more casualties will follow. The pressure will be on until at least the second quarter of 2010.
"The closure of a restaurant affects a wide range of people. The owners and staff take the consequences first and have to start job searching; but the suppliers of food and beverages, the landlords, the council and all other people who supply services to, or for, the venue lose out on an income stream."
He said restaurant operators planning to open new outlets should be cautious, and intelligent decisions must be made in reading their target market and subsequent product.
Cape Town Regional Chamber of Commerce and Industry head Albert Schuitmaker said last week that consumers were down-scaling, and this was affecting businesses.
He said this would have a snowball effect right through the economy, from suppliers to customers.