The Restaurant, Fast Food and Catering Industry in South Africa 2023

Introduction

The restaurant, catering, and fast food industry showed resilience in 2022, but not all establishments have recovered to pre-pandemic levels. The recovery has been severely limited by power cuts, and water cuts in some areas, which have put many operators, particularly independent businesses, at risk of closure. Larger companies and fast food chains have fared better than independent operators. Declining disposable income resulted in lower weekday footfall for hospitality and dining businesses. The Franchise Association called for urgent action from the government.

Opportunities

Development of innovative, indigenous, and healthy menu options. Expansion into the rest of Africa, the Middle East, and other international markets. Expansion into untapped local markets such as townships and rural communities. Ghost kitchens in densely populated urban areas and CBDs. Growth in the informal/township sector. Sustainably sourced, organic, and plant-based menu items. The development of affordable food franchising models.

Outlook

Rising interest rates, unemployment, and high food and fuel prices led to a rampant increase in the cost of living in 2022. Restaurants did better than expected in these circumstances but growth started to slow in the latter part of 2022. Power cuts are expected to continue to affect trading and increase operational costs in the industry. While the franchise segment is expected to fare better than independents due to economies of scale, managing food costs and developing value for money products will remain a focus in menu development for all players.

Report Coverage

This report on the restaurant, catering and fast food industry in South Africa includes information on the state of the sector, its major players, sales and profitability, developments and corporate actions, as well as influencing factors including the effect of power cuts, labour and the economic environment. There are profiles of 57 companies including major players such as Famous Brands and Spur Corporation, large franchises such as KFC, Burger King, Ocean Basket and Seattle and caterers including Bidvest Catering Services, Air Chefs and Tsebo Solutions.

Strengths

Franchises have an extensive geographical footprint. South Africa is a developed market. The industry is well established, and strong international and local franchise brand provide effective support.

Threats

Above-inflation increases in food and living costs. Escalation of loadshedding. Increasing levels of unemployment impacting disposable income and consumer spending. Supply chain disruptions.

Weaknesses

High operating costs. High staff turnover. Low paying. Poor economic conditions. Quality control is inadequate, particularly in the informal sector. Startup capital is often difficult to access.