Covid is over, the great reopening trade is just beginning
Covid-19, like any virus, is dying a slow death. The hysteria and fear-mongering that fuelled pandemic panic is finally drawing to a close. Anecdotally, this is obvious to see, with lifestyle- and hospitality-focused industries roaring back to pre-Covid-19 levels. Humans, by their very nature, are social animals. We love to see, touch, feel and laugh. Although the pandemic brought about certain structural changes in lifestyle that will remain for the foreseeable future, we missed nearly two years of what matters most: social interaction and experiences. Governments and health organisations that were previously extremely conservative in their approach towards the coronavirus, have turned the tables and are opening the doors to life again. The pent-up demand should be strong for some time to come, as people look to make up for lost life experiences. After all, time is our most precious commodity.
The bullish reopening thesis is backed up by company results, whether international or local businesses. Global entertainment and media conglomerate Disney announced upbeat results after the bell in New York last night, underpinned by surging demand for its parks business, which analysts on Wall Street called an "incredible beat". Probably the best proxy of normalisation, hotel occupancies are picking up all over the world, even in South Africa. Listed hotel chains Sun International, Tsogo Sun and to a lesser extent, City Lodge (owing to its reliance on business travel, which hasn't shown) have all enjoyed an uptick albeit from a low base. Airbnb, which recently listed in New York, confirmed worldwide travel and leisure is nearing pre-pandemic levels.
Restaurant groups such as Famous Brands – although not a perfect proxy given its exposure to fast foods and food delivery services, which benefited from lockdown – have boomed. To try and get a better understanding of the health of the restaurant industry, I reached out to Grace Harding, founder and CEO of Ocean Basket. Grace was a regular on BizNews during the pandemic, where she shared the struggles the hospitality was going through amid numerous draconian restrictions that nearly brought the industry to its knees. My question was simple; how is the industry doing?
Covid-19 has brought the industry closer together. Restaurant owners realised they needed to stick together and each other. The entire value chain of the industry was forced to think differently; from wholesale providers to software, fresh goods. People seem to be coming up with solutions together. We have learnt we are one system and there needs to be a win-win.
The industry has learnt how to manage stock and staff better. Pre-pandemic, the attention paid to wastage or having too many staff on a shift was not a priority. The last two years have forced us to learn to do more with less. Staff have been so appreciative of their jobs and are hungry for their restaurants to grow again.
I think the results are different for different types of restaurants. For example, high-end fine dining and bar establishments are thriving. Those who had money seem to still have it (and some maybe a little more). The casual dining sector is crawling back. I believe this segment will have a tough 2022. There are a few contributing factors: people are exhausted, run down. Owners have taken a financial and emotional beating. We need time to recuperate and find our mojo. There is a pile of debt to pay off and the current expense of running our businesses to keep up with. Landlord demands remain a daily battle.
The high unemployment rate is a real challenge for casual dining. Our challenge now is dealing with the crippling economy of our country.
Grace's comments ring true for many industries adversely affected by Covid-19. Businesses have streamlined and become more efficient and when the demand comes – which it will – profitability and all other important financial metrics will skyrocket. There seems to be a shift in sentiment when it comes to the pandemic. Academics, politicians and physicians are crying out for the end of the pandemic. Two years too long?
It's time to live again.
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