Businesses such as nightclubs, bars, lounges and other hangout spots have suffered huge financial losses due to the outbreak of the Covid-19 pandemic and subsequent lockdown.
Business owners who typically make huge sales over the festive season say they are likely to suffer further losses, especially after the reintroduction of a curfew on alcohol sales and stricter crowd restrictions. This puts a damper on their two biggest profit generators.
Yaman Hammar, owner of Four Four Two, a sports and music lounge in Pretoria, said the initial alcohol sales ban and subsequent partial lifting of the ban had a devastating blow to his lounge.
Adding to this were the strict limitations on the number of people allowed together in public spaces, with the frustrated businessperson adding that this “bad news” took a toll on the lounge – which easily accommodates 400 people a night.
Rosemary Anderson, national chairperson of the Federated Hospitality Association of SA, said the lockdown devastated the hospitality sector, and establishments of all sizes had been dealt a blow.
“When we specifically look at the smaller operators in hospitality, the majority of them find raising capital to buy or set up their coffee shop, take-away restaurant, small hotel or guest house very difficult since it is not an industry profile that the banks readily lend money to,” she said.
Anderson added that the lockdown had pushed some business owners to dip into their own pockets to cover expenses.
BEYOND THE BUSINESS
“The tragedy of the national shutdown is that many hospitality businesses that could not hold on any longer have not only lost their hospitality businesses, but their homes and other assets too,” she said.
This resonated with Hammar, who said he had to cover expenses such as rent, and water and electricity, despite halting operations.
“My staff consists of not only waitstaff, but also cleaners, kitchen staff, bouncers, resident deejays and managers.
“I couldn’t let any of them go because I knew I’d need them when we reopened,” he told City Press.
Hammar said the gradual move to lower lockdown levels may have done more harm than the good that was intended.
“When we reopened, we had to reduce our capacity. So instead of the 400 people I had to now accommodate only 100.
“Being closed for so long also meant that we had to clean, sanitise and fix up a few things in the lounge.
“We also had to have a big reopening so that customers would know we were back. Some of our stock had also expired and we had to throw it out when we reopened. That is a big loss,” he said.
With Four Four Two a popular hangout spot for students, Hammar said the closure of universities and the introduction of online learning also had an impact on their customer base.
“When the levels went down, students started coming back to institutions, but only half of them actually came back. In that half, only half had money to spend.
“We’re now into the festive season and we’re a week from closing because students have gone home again. That is again a huge loss.”
The Covid-19 pandemic also led to an increase in contactless transactions, which brought about more unexpected costs.
“People were afraid of paying for things in cash. They were afraid of catching the virus, so most preferred paying with their cards.
“Just last month, I had to pay more than R8 000 in bank fees because of all these transactions.
“Someone would come in and swipe their card for one bottle of beer or a pack of cigarettes. The banks charge us for those transactions,” he said.
Echoing this sentiment, Jabulani Zama, who owns Eyadini Lounge in KwaZulu-Natal, said it was not only likely that the business would continue functioning at a loss this festive season, but that it would take some time before it could return to its former glory.
Eyadini recently came under fire for allegedly violating Covid-19 regulations after a video surfaced of patrons dancing and drinking with no observation of social distancing or health protocols, and many were not wearing masks.
Zama said the event, which entertained between 150 and 200 people, was “immediately stopped when the video went up. Covid-19 is something that we can’t run away from. We have to respect the regulations and I don’t want people to have their last Christmas this year.”
He said people had started cancelling their bookings even before the video was posted.
“It’s been a tough period. There were times when I had to take money out of my own pocket to pay my staff,” he said.
DELICATE BALANCING ACT
Anderson said governments across the world were tasked with the difficult job of preserving lives while trying to “keep the economy open and protect livelihoods”.
“Added to this, [government] is also dealing with populations that are not as compliant, amenable or agreeable as they were at the start of the first wave, and who feel a measure of resentment towards lockdowns and the loss of livelihoods that has resulted.
“I don’t envy any government minister trying to make decisions in this regard. It is such a difficult balancing act.
“The reality is that most hospitality businesses are currently financially vulnerable, so any further reduction in their incomes due to restrictions will make it very difficult for them to continue to hold on, due to their already battered and compromised financial positions,” Zama said.
RELIEF FUNDING REJECTED
Zama, whose application for government relief funding was rejected, said “the biggest problem are the banks”.
“These are the worst people because they always want their money, regardless of the situation.”
On the other hand, Hammar said he didn’t expect government to take money out of its own pocket as a form of assistance. But he lamented the unfairness of being expected to pay rent, as well as water and electricity bills despite his lounge not being operational.
“I think government needs to talk to landlords and ensure that we at least pay half the rent, and get a discount on water and electricity.”
Meanwhile, Anderson said only those companies that were in a good financial standing were able to survive the crisis.
“The companies that have weathered this crisis the best are those that have not had substantial debt and had cash reserves to call on.
“I think in future people and businesses will be far more conservative regarding their exposure to debt.”