Eating out, chowing down

2008-07-11 00:00

Inflation, fuel prices and plummeting consumer confidence is taking comfort eating to new heights — but instead of tucking into expensive T-bones, most consumers are biting down hard into the lowly hamburger.

Sushi is in, despite rocketing rice prices, and plush restaurants still serve caviar and oysters.

However, middle market restaurants have more empty tables, while fast food outlets are gobbling up the profits.

For starters, according to Chef-On-The-Run Andrew Draper, restaurants rather than customers are taking the knock. They usually change menus — and prices — annually. With ongoing food price increases, the grocery bill has to be weighed up against the cost of reprinting the menu. For the moment, the menus are winning.

But he expects prices to increase by between 20 and 30% at reprint time. “Some elegant salads now cost more than the mains,” said Draper, adding that vegetables are the main culprits. His vegetable bill stands at between R2 500 and R4 000.

Yet Draper is lucky. At least 70% of his business is company catering. He says fellow chefs report a very real slow down. The manager of a top Durban restaurant who has now relocated to Cape Town said regulars appear once rather than twice a month.

Warren Branigan, who runs Pinetown’s Butcher Block, said that while lunch numbers fluctuate, dinner guests have dropped dramatically. Expense accounts are still doing the trick for business clients, but families arrive less regularly.

Instead of putting up prices, he said they are readjusting downwards and offering specials. “We can’t put prices up or people won’t come. We should be doing at least R100 000 more [in turnover], but we have to push on and keep standards up. We will do whatever it takes to get bums in seats.”

Another top restaurateur said he has simply taken dishes off the menu. Stuart Mey, owner of The Dockyard supper theatre, has cut his main course to R40 and left starters as optional extras.

Leonard Coetzee, regional manager for Spur, said things are “still pretty buoyant” with loyal customers still dropping by, albeit less regularly. “We are definitely trading down on a year ago.

[We find] customers can no longer afford ‘risk’ meals. They need to know what they are going to get.”

In tough times, the strong brands will survive because they have the critical mass to manage input costs and continue to market aggressively, says Carlos Gonzaga, chief executive of listed restaurant group Taste Holdings. He said both the Scooters Pizza brand and the Maxi’s casual dining franchise are registering “positive but moderate” growth. He said people will dine down rather than stop eating out.

Craig McKenzie, managing director of Retsol, holding company for Juicy Lucy and Ola Milky Lane, said growth remains encouraging, but he also confirmed that people are trading down.

His main concern is “the cost squeeze” that forces them to accept lower margins and the fuel price, which is driving up distribution costs.

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