May 2022 Stats SA Restaurant, Take-Aways and Catering Income data show further slowdown in year-on-year growth in revenues after a significant post-lockdown recovery. Total Food and Beverage Income for the Sector grew by 14.5% year-on-year in May, which is still solid, but slower than the 18.8% rate for April, and the 4th consecutive month of growth slowdown.

More important, when assessing performance these days, is to compare recent levels with levels of sales in the pre-lockdown year of 2019. Here, the picture looks less solid, the May 2022 income level for this sector being -7% below that of May 2019.  In inflation-adjusted “real” terms, this is still a very significant -17.2% below the May 2019 level (inflation adjusting using a Hotels and Restaurants CPI).

Splitting it up into the 3 sub-sectors provides further insights, pointing to a strong shift towards a far greater “take-aways” culture over the Covid-19 lockdown period.  All 3 sub-sectors, i.e., “Restaurants and Coffee Shops”, “Take-Aways and Fast Food” and “Catering”, have been growing solidly of late, and all 3 have recently seen growth slowing as the economy comes under increasing pressure.

However, when inflation-adjusting the sectors’ revenues and comparing with May 2019, we see starkly contrasting pictures between the 3 sub-sectors.

From this it emerges that Take-Away and Fast-Food outlets’ incomes have massively outperformed Restaurants and Coffee Shops, as well as the Catering, category.

Real income of the Take-Away and Fast-Food category is a strong 37.4% up from May 2019 in real terms.

Restaurants and Coffee Shops by comparison are -29.2% down in real terms from May 2019, while Caterers are an even more extreme -38.4% down over the same period.

Conclusion

The data points to 2 key trends emerging. Firstly, growth in the overall Restaurant, Take-Away and Catering Sector is showing signs of slowing, albeit still solid in recent times.

This has been expected, firstly due to the normalization of activity following lockdowns having more-or-less been completed. Secondly, some negative economic events are likely beginning to force consumers to reprioritize  expenditure partly away from non-essential spend such as eating out and take-aways. These events include rising general inflation, especially in the area of petrol prices, as well as rising interest rates, and a slowing economy constraining household income growth.

In addition, the data has been pointing to a “structural” shift towards a greater take-away/fast food/convenience culture, also probably boosted by improved delivery capability of many outlets.

Post-Covid 19 lockdowns, therefore, consumers appear far more about convenience and speed, and take-away/fast food outlets cater more for this.

The sharply weaker performance in sit-down restaurants and coffee shops since prior to Covid-19 has arguably put retail centres with a greater focus on this at a relative disadvantage. A focus on the Fast Foods and Take-Aways category through the Covid-19 period appears to have been significantly more advantageous.

Source: FNB