Economic strain leads to surge in restaurant closures in Durban

Umhlanga is Durban's playground of the elite. The place to be seen. The hub of late-night partying and dining. But, there's a shift in mood - if the number of restaurants closing down is anything to go by.

"We've had more than six restaurants closing down in the past two months in Umhlanga and Durban North alone. Some iconic names. And the common problem is high rentals vs rising operating costs. If restaurant owners did not negotiate their rentals post Covid they won't survive," said Shalin Simon. Simon owns several restaurants in Umhlanga and Florida Road in Durban, including Capellos.

His sentiments are echoed by others in the industry.

And, with the sector contributing more than R6 billion to the economy and creating more than 16 million jobs, restaurant closures are felt beyond simply the loss of a dining experience. And, whilst the economic impact of load shedding is being felt nationally, Durban appears to be worse off.

Fighting off Cape Town for a slice of the tourism pie has not been an easy battle. Beach closures, water restrictions and a constrained spending power compared to other key metropolitans have left Durban with a bloody nose in the battle for a market share.

The tsunami of the economic impact has not spared anyone - with small, medium, and large businesses falling victim. Even larger, national franchises have not managed to cushion the impact. Famous Brands - owners of iconic food brands like Steers and Mugg & Bean have closed 41 brands nationally citing changing consumer behaviour and underperformed stores.

"Durban’s restaurant industry is under immense pressure. We are navigating a declining market while battling rising electricity costs, increasing labour expenses, and high rentals that make it harder to stay afloat. Many restaurant owners are doing everything possible to find innovative ways to generate revenue just to keep our doors open and sustain jobs," said Nqobile Mthembu who owns the Madam & Sir restaurant on Florida Road. Her restaurant has also just been nominated as the best restaurant in the KwaZulu-Natal category in the South African Restaurant Awards.

"The perception of crime and deteriorating infrastructure, like poor street lighting and beach closures, only add to the challenge. On the one hand, we are making great strides, like being nominated for prestigious awards. Yet on a daily basis, we are struggling to pay rent. Durban’s restaurant industry has the talent and potential to thrive, but without meaningful support and a more sustainable operating environment, many of us won’t survive." 

A property owner on Florida Road who did not wish to be named also weighed in, saying, " We are charged excessively high rates by the city on commercial properties. We are taxed way higher than Cape Town properties and receive a quarter of the benefits. That needs to change."

Organisations such as the Restaurant Association of South Africa are stepping in to assist the industry. There's a sense of urgency from all role players that efforts need to be intensified to save jobs and prevent more restaurants from closing.

But can the battered and bruised industry recover? Despite the gloomy outlook, Durban has always been the comeback kid. The resilient city that bounces back, even when it's down. And so, there's still hope.

Ironically, whilst Durban reports a spike in restaurant closures, there is also a boom in the halaal food sector. A proliferation of halaal outlets has seen Durban saturated with halaal offerings - with even iconic restaurant strips like Florida Road now commanding a substantial market share of halaal eateries. Whether they would weather the storm or ride it is left to be seen.

But, for the Durban Chamber of Commerce, the revival of the industry is critical.

"The restaurant industry not only supports various other sectors but also plays a crucial role in our economy by contributing to job creation and providing opportunities for the youth. It generates income and employment taxes while supporting SMMEs, thus strengthening both our local and national economy. Closure of restaurants, coupled with beach closures, will negatively affect both Durban and KwaZulu-Natal’s GDP. Durban and KwaZulu-Natal’s GDP are closely tied to the tourism industry. As the Durban Chamber of Commerce and Industry NPC, we are committed to reviving the tourism by focusing on promoting tourism as a key economic driver for the province and eThekwini Municipality. We are seeing significant progress being made through these engagements," adds Palesa Phili, CEO of the Chamber.

IOL