Restaurants in Nigeria have in the past five months seen up to between 50 percent and 60 percent drop in sales due to restrictions imposed by the Federal Government to combat the spread of the coronavirus pandemic, according to estimates by practitioners who spoke with BusinessDay on the matter.
A relaxation of the restrictions by the middle of this month will offer little comfort to the business, experts say.
A BusinessDay survey of some restaurants in Lagos and Abuja, Nigeria’s major cities, found that they were not generating enough sales from take-outs (prepared food packaged to be consumed away from its place of sale) and food delivery services they were allowed to operate.
Wale Abioye, a manager at Sweet Sensation, a Lagos-based fast food restaurant, says operators generate more revenue from dine-in services than take-outs because people are more likely to make more purchases if they stay longer in the restaurants, unlike one-time purchases from take-outs.
“Government regulations and the fear of COVID-19 are a challenge because there is no continuous purchase. A lot of people that do repeated purchases through deliveries which cost money don’t get the full value of their money for what they are spending on, because they pay that part of value for deliveries,” Abioye states.
Gboyega Olurankinse, owner, Elevens Restaurant and Lounge, a Lagos-based restaurant, notes that generally for restaurateurs, take-outs have affected their business because most people love dine-in services as they provide an avenue for people to gather, relax and spend time with their families.
“For me, sales have roughly dropped by 60 percent. And with that, we had to cut cost by rationing staff and reducing some processes like energy cost,” he says.
In March, when the number of new cases of COVID-19 started to increase, restaurants limited dine-in table services to only 20 people, while other customers were offered take-outs instead.
When there was a full lockdown in April, some restaurants were completely closed while others that opened only offered limited menus. After the lockdown was partially eased, the government directed them to offer only take-out services to their customers.
“It is a struggle for us because sales have dropped below 50 percent and because of that, we had to send half of our staff home since we don’t require their services,” Stephine Emeruwa, a manager at Ketchup, an Abuja-based restaurant, says.
Emeka Vincent-Eloagu, owner and lead chef at Hélène’s Food Co, an Abuja-based gourmet food company, states that business has been very slow as they are not getting enough walk-ins and dine-ins like before and so a lot of revenue is being lost.
“We are functioning at most at 5 percent of our usual capacity. This means we are not really making ends meet,” he says. The hospitality industry, which restaurants are a part of, recorded the worst half-year performance in history as hoteliers, brand and franchise owners, and destination managers decry that the industry lost over N50 billion in the first half of 2020.
“The purpose of Fast Food restaurants and dine-ins are in two folds, a form of meal tourism and essential food services. With the lockdown and restriction of public gathering, the meal tourism aspect of their food has died,” Cheng Fuller, a retail expert, says.
“This is almost like 65 percent of their addressable market taken off the table, which is people who just come to relax and enjoy the armoire. So, imagine a business that caters for 100 customers but by default, 65 percent of customers have been taken away. So, the potential for revenue earning is just from 35 percent of customers doing takeaways,” he says. Some relief is coming for the restaurants as over the weekend, the Lagos State government said they can now operate dine-in services from August 14 on the condition that they maintain 50 percent capacity.
But even with the reopening of dine-in services, experts are of the opinion that it is still nigh-impossible for restaurants to make a profit at reduced dine-in capacity.
“There is a difference between 100 and 50 percent capacity. If they operate at 50 percent, they will not have the same client base they used to have before and also, they may not even get the 50 percent capacity of people due to lack of confidence of people to eat out,” Ayorinde Akinloye, a consumer analyst at CSL Stockbrokers, says. “So, the best they can do is rationing their cost and boost their online delivery platforms.”
In countries like the US, the pandemic has hit restaurants hard as fewer diners are willing to eat inside. According to the United States National Restaurant Association, over 15,000 restaurants have permanently closed down during the pandemic.
