by Rosemary Anderson, FEDHASA Inland Board Member
The latest Statistics South Africa Food & Beverage Survey (May 2026) paints a concerning picture for one of South Africa’s largest employers.
While many may view a decline of only 0.3% in real income as relatively insignificant, those operating restaurants, pubs, coffee shops and food service businesses know that these figures tell a very different story. A story restaurateurs have felt for many months – but is only now being reflected in the stats. In real terms (constant 2019 prices), food and beverage income declined by 0.3% in May 2026 compared with May 2025. Looking at the latest three-month period, food and beverage income fell by 0.2%, with restaurants and coffee shops declining by 1.7%, making them the largest contributor to the industry’s decline.
Seasonally adjusted figures tell a similar story, with income decreasing by 0.6% over the latest three months, once again driven primarily by restaurants and coffee shops.
These are not simply statistics.
They represent thousands of business owners who are working longer hours, carrying greater financial risk and employing millions of South Africans while trying simply to survive.
Turnover is Flat – Costs are Not
The greatest challenge facing the hospitality industry is that turnover has remained largely stagnant while operating costs continue to increase at unprecedented levels.
Every significant expense faced by restaurants has increased substantially over recent years, from electricity tariffs to food – to every single input cost.
For many hospitality businesses, these cost increases have far exceeded consumer inflation. In practical terms, restaurants today generally require annual revenue growth of between 10% and 15% simply to maintain the same profitability. Any increase below this often means the business is actually going backwards financially.
This is why a real decline of 0.3% is far more significant than it first appears.
Government Must Understand the Reality
The hospitality industry fully supports legislation that protects employees and customers.
However, new legislation must also be practical, affordable and proportionate.
Unfortunately, government departments often introduce new compliance requirements without fully appreciating the cumulative financial impact on businesses that already operate on extremely small profit margins. Although aimed at improving workplace health and safety, these regulations introduce additional obligations. Each of these requirements carries a cost.
For larger organisations these costs may be manageable.
For independent restaurants, cafés, pubs and family-owned food businesses already operating on margins often below 5%, every additional compliance requirement places further pressure on their viability.
No individual regulation may appear excessive in isolation. The problem is the cumulative effect.
When combined with escalating municipal charges, increasing utility costs, higher food prices, rising wages and ongoing economic uncertainty, another layer of compliance can easily become the difference between remaining open and closing permanently.
One of South Africa’s Greatest Job Creators
The irony is that restaurants are among South Africa’s greatest creators of employment. Few industries employ more people per square metre of trading space than the hospitality sector. Importantly, our industry creates employment opportunities for people from every educational background.
Restaurants provide first jobs for school leavers, opportunities for individuals with limited formal education, practical workplace training, career development and entrepreneurial opportunities. In a country where unemployment remains one of our greatest national challenges, this sector should be encouraged – not burdened. Every restaurant that closes means job losses, suppliers lose customers, farmers lose markets, local economies lose spending.
The ripple effect extends far beyond a single business.
A Different Approach is Needed
FEDHASA believes there is a better way.
Government should actively work with the hospitality industry to create an environment where businesses can grow, invest and employ more South Africans.
This includes:
- Simplifying regulatory compliance for small and medium-sized hospitality businesses.
- Conducting meaningful economic impact assessments before introducing new regulations.
- Recognising hospitality as a strategic employment sector deserving of support.
- Ending the ongoing disruption to essential bulk services that is undermining business sustainability.
- Moderating above-inflation increases in rates and utility charges.
- Creating incentives for businesses that expand employment and skills development.
Hospitality is an Investment in South Africa
Restaurants are far more than places where people eat – they are community gathering places, tourism attractions, training grounds for future professionals and one of the country’s most accessible entry points into employment.
The latest Statistics South Africa figures should serve as a warning.
Our industry remains resilient, innovative and optimistic.
But resilience cannot replace profitability.
If South Africa genuinely wishes to reduce unemployment, stimulate tourism and grow local economies, then the restaurant and food service sector must be recognised as a strategic partner in economic development – not simply another industry upon which additional costs and regulatory obligations can be imposed.
Supporting hospitality businesses is not merely good for the industry.
It is good for employment.
It is good for tourism.
It is good for communities.
And ultimately, it is good for South Africa.
