The latest Covid-19 level 4 lockdown restrictions have been a further blow to the embattled liquor, restaurant, leisure and tourism industries which are still struggling to recover from the hard lockdown in the second quarter of 2020 restrictions during the second wave and a total of four alcohol bans.
Many business owners in these sectors have not yet managed to catch up on arrear rental payments and will be falling further into arrears. These latest restrictions – which some analysts predict may be extended beyond the initial two weeks announced by President Ramaphosa – are not being accompanied by any plans from government to provide financial support for businesses impacted by the restrictions.
The Property Industry Group provided R3 billion rental relief to SMME retail tenants during the first hard lock down. TPN analysis of the data indicates that even this substantial value of relief didn’t stem the flood of delinquencies, as tenants three months or more in arrears increased from 7% prior to lockdown, to 10% in April 2020 in the initial months of rental relief, peaking at 19.12%, or one-in-five tenants more than three months in arrears in September 2020.
As the economy opened up again in the last quarter of 2020 and first quarter of 2021, severe commercial tenant delinquencies improved to 15.42% by March 2021. New level 4 restrictions will no doubt reverse some of these gains as business owners in affected sectors are struggling for their very survival.
Although restaurants have been permitted to do takeaways, a significant proportion of their profits come from alcohol sales. Co-owner of the Local Grill in Parktown North, Steve Maresch, says although the business is doing everything it can to make the takeaway space work, it is challenging. Finding packaging that travels well and preparing an expensive piece of steak in a way that allows it to be reheated without being overcooked is just the start of the restaurant’s challenges.
“Our rent is in arrears,” he reports. “We’ve been in this space for 18 years and although the local community and our landlord have been incredibly supportive and loyal in the past year, there is no denying that this has been a very difficult period. This is our last stand: we have depleted all our resources. If we have to close our door during these latest restrictions, we won’t be re-opening.”
That means, he reveals, that 26 staff as well as three managers and two co-owners – the majority of whom are the primary breadwinners in their respective families – will be joining the ranks of the unemployed.