News / Africa

South African Restaurants Hurt by Climbing Electricity Prices

Waiter Terence Kamanda poses for a picture as he serves customers in The Corner Cafe restaurant in Durban, April 26, 2012.
Waiter Terence Kamanda poses for a picture as he serves customers in The Corner Cafe restaurant in Durban, April 26, 2012.
South Africa’s historically low electricity prices have increased dramatically over the last four years, and are expected to continue to do so over the next five.  For those in the restaurant business, it means lower profit margins, rising prices and layoffs. 

The lifeblood of a restaurant is in the kitchen.  Inside that backroom, stoves are constantly burning, ovens baking and dishwashers cleaning.

In terms of electricity, the meter is always spinning upward and costs are growing quickly.

The price of electricity in Johannesburg has risen by an average of 27 percent each of the last four years.  This year, Eskom - South Africa’s electric utility - raised prices by 16 percent. Similar increases are expected annually over the next five years.

"We have made it clear that we will be applying for the above inflation increases because our maintenance costs are going up by more than inflation.  But also we have to be in position to finance the very large new build program that we are in the middle of at the moment," said Hilary Joffe, the spokeswoman for Eskom.

Eskom is building new power stations to try to meet rising demand as more and more poor South Africans get on the grid in the post-apartheid era.

Slimming profits

In Fordsburg, a primarily Pakistani and Indian neighborhood in Johannesburg, restaurateurs are dealing with these rising costs in various ways.

The entrance of Rashid Ebrahim’s bakery - in an old church building - is lined with displays of doughy, sweet pastries.  In the back, his bakers slide trays in and out of ovens.  But with rising energy costs, he’s had to make changes.

"I haven’t raised the prices as of yet,  I’m just absorbing on my profit, taking a lesser profit," he said.  "The turnover is still the same, but the profit margins are lower."

Those slimming margins have led him to cut his staff from 15 down to 10.

"I don’t feel that’s the right thing to do, but it’s the only way to go if you want to really survive," he said.

Ebrahim is now looking at raising prices on his goods 15 to 20 percent.

Making money in the restaurant business isn’t always easy, especially for those just starting out, says Larry Hodes with The Restaurant Code, a consultancy firm in Johannesburg.

"Restaurant utility bills used to be about 2.5, 3 percent of expenses of sales as a percentage. Now suddenly you are looking at 4 to 5 percent.  It’s quite crazy right now in terms of utility costs," he explained.

Energy-saving tips

There are some steps he’s advising restaurants to take.

"Even this week I walked into a restaurant where, you know gas and electricity - the stoves are left on all the time," said Hodes. "One of the key things, it sounds simple - but you know it comes from management - is that you have to train your staff how to more effectively and efficiently use your gas and your electricity and everything.  You know that is where possibly a restaurateur can have the biggest impact immediately."

Eskom also has several programs to help ease the costs of electricity, including, Joffe says, some that subsidize pre-approved energy efficient products bought by businesses.

"If enterprises can show us that they have effective savings, we will compensate them for those," she said.

She says Eskom is working with businesses across the country to upgrade equipment which will put less strain on the country’s energy supply.

"Really, the economics of it work for us," she said.  "It is much cheaper to invest in energy-efficient technology which will reduce the amount of new generation capacity that we will need in the future than it is to invest in building new power stations. We estimate we are upgrading about 1,000 commercial customers a month to more energy efficient technologies."

Shutting down

But for some, these new costs are just another strain on business.

Restaurant owner Azhar Chaudhry worked as a cameraman for two decades before settling in Johannesburg to open an establishment serving his native Pakistani fare.

But increasing prices - along with his restaurant being robbed several times last year - means Chaudhry is thinking of selling his business and moving to Dubai.

"Rent is not coming down.  Electricity is going up.  Salaries will go up every year for the staff, so you cannot carry on," he said. "Thank you very much South Africa.  I’m going back. I’m definitely trying to sell and leave.”

He says, in the meantime, he’ll consider raising prices, but it likely won’t be good for business.

You May Like

Philippines, Muslim Rebels Try to Salvage Peace Pact

Peace process faces major setback after botched military operation to find terrorists results in bloody gunbattle between government forces, Moro Islamic Liberation Front fighters More

Republicans Expect Long, Expensive Presidential Battle

Political strategist says eventual winner will be one who can put together strongest coalition of various conservative groups that make up Republican Party More

Video New Wheelchair Is Easier to Use, Increases Mobility

Engineers have come up with a lever-operated design that makes use of easily accessible bicycle technology More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Liberia's Almost Last Ebola Patient Grateful but Still Grievingi
X
Benno Muchler
March 26, 2015 3:41 PM
Beatrice Yardolo was to make history as Liberia’s last Ebola patient. Liberians recently started counting down 42 days, the period that has to go by without a single new infection until the World Health Organization can declare a country Ebola-free. That countdown stopped on March 20 when there was another new case of Ebola, making Yardolo’s story a reminder that Ebola is far from over. Benno Muchler reports from Monrovia.
Video

Video Liberia's Almost Last Ebola Patient Grateful but Still Grieving

Beatrice Yardolo was to make history as Liberia’s last Ebola patient. Liberians recently started counting down 42 days, the period that has to go by without a single new infection until the World Health Organization can declare a country Ebola-free. That countdown stopped on March 20 when there was another new case of Ebola, making Yardolo’s story a reminder that Ebola is far from over. Benno Muchler reports from Monrovia.
Video

Video Cambodian Land Grabs Threaten Traditional Communities

Indigenous communities in Cambodia's Ratanakiri province say the government’s economic land concession policy is taking away their land and traditional way of life, making many fear that their identity will soon be lost. Local authorities, though, have denied this is the case. VOA's Say Mony went to investigate and filed this report, narrated by Colin Lovett.
Video

Video US, South Korea Conduct Joint Military Exercises

The Eighth U.S. Army Division and the Eighth Republic of Korea Mechanized Infantry Division put on a well orchestrated show of force for the media this week during their joint military training exercises in South Korea. VOA’s Seoul correspondent Brian Padden was there and reports the soldiers were well disciplined both in conducting a complex live fire exercise and in staying on message with the press.
Video

Video Space Program Status Disappoints 'Last Man on the Moon'

One of the films that drew big crowds last week at the annual South by Southwest festival in Austin, Texas, tells the story of the last human being to stand on the moon, U.S. astronaut Eugene Cernan. It has been 42 years since Cernan returned from the moon and he laments that no one else has gone there since. VOA’s Greg Flakus reports.
Video

Video Young Filmmakers Shine Spotlight on Giving Back

A group of student filmmakers from across the United States joined President Barack Obama at the White House this month for the second annual White House Student Film Festival. Fifteen short films were officially selected from more than 1,500 entries by students aged 6 through 18. The filmmakers and their families then joined the president and a group of celebrities for a screening of their films. VOA’s Julie Taboh reports.
Video

Video VOA Exclusive: Interview with Afghan President Ashraf Ghani

Afghan President Ashraf Ghani, during his first visit as president to Washington, gave a one-on-one interview with VOA Afghan Service reporter Said Suleiman Ashna, about his request for a change in U.S. troop levels, the threat from the Islamic State, and repairing relations with the United States and Pakistan. The interview was held at Blair House, late Sunday, in Pashto.
Video

Video California Science Center Tells Story of Dead Sea Scrolls

The ancient manuscripts were uncovered in the mid-20th century, and they are still yielding clues about life and religious beliefs in ancient Israel. As VOA's Mike O'Sullivan reports, an exhibit in Los Angeles shows how modern science is bringing the history of these ancient documents to life.
Video

Video Angelina Jolie Takes Another Bold Step

Hollywood actress and filmmaker Angelina Jolie has revealed she had her ovaries and fallopian tubes removed to lower her odds of getting cancer. Doctors say the huge publicity over her decision will help raise awareness about the importance of cancer screening. VOA’s George Putic has more

All About America

Circumventing Censorship

An Internet Primer for Healthy Web Habits

As surveillance and censoring technologies advance, so, too, do new tools for your computer or mobile device that help protect your privacy and break through Internet censorship.
More