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Wealthier South Africans also struggling

When tashas reports a decline in sales, you know there’s a problem.

It appears that upper middle-class households in South Africa are doing less well than thought. With financial stress being particularly acute in the lower income and broad middle-class segments, there are stark indicators that wealthier consumers are also under pressure, and are tightening their belts.

Buried in Famous Brands’s interim results to August 31, is the news that “trading conditions proved extremely difficult for the niche brands” in its “Signature” portfolio. These include darling tashas, steakhouse Turn ’n Tender, Greek restaurant chain Mythos, new seafood chain Catch, Salsa Mexican Grill and (mostly KZN-based) Italian ‘Osteria’, Lupa.

Read: Famous Brands bets the farm on UK burger restaurant recovery

Same-store sales declined at all of these brands. Now, certain of them are either very new (like Catch) or trade out of a handful of outlets (like Lupa Osteria and Salsa), and therefore can’t be used as a bellwether for the upper end of the market.

However, the fact that same-store sales declined at tashas and Turn ’n Tender and Mythos is very concerning indeed. Anecdotally, tashas stores (I’ve been to a handful in recent months) seem quieter than usual and the brand hasn’t put through a menu price increase in some time. In certain Signature brands, including Europa, The Breadbasket and Vovo Telo, both same-store and system-wide sales dropped, due to store closures.

It is – obviously – not just the casual dining segment that is being hit.

Woolworths, which plays squarely in the upper-middle to upper-end of the market, saw annual same-store sales in its clothing and general merchandise business drop by 0.9%. Its Food business, which was growing sales by double-digits as recently as three years ago, reported an 8.6% increase in sales for the year to June 25, with 4.6% same-store sales growth.

Strip out inflation of 6.6% for clothing and general merchandise and 8.4% for food, and same-store sales declined by 7.5% and 3.8%, respectively.

It must be noted that at the half-year mark (post-Christmas), comparable clothing sales were up 1.2%. It’s the same story in food, where sales were up 9.5% at the half-year mark, but just 8.6% for the full-year. So far, 2017 has been brutal and there are no clear signs of improvement.

Even education, arguably the last thing households would cut back on, is taking a knock.

Private education group ADvTECH, in August said the “difficult economic climate and unsettled socio-political environment had a more significant effect on enrolment numbers than had been anticipated”. The group said it has “seen an increase in withdrawals and exclusions as a result of financial pressures” in its schools division and that a “consistent rise in the number of families emigrating [has] had a particularly negative effect on enrolled numbers as we lose students in grades where it is difficult to replace”.

In three of its school groups, including Crawford, Centurus (Pecanwood College, Southdowns College and Tyger Valley College), as well as its Junior Colleges pre-schools, over 40% of leavers were due to emigration. It lost a higher than expected 1 210 students between December 2016 and July 2017 which, after enrolment, meant a net gain of 578.

Competitor Curro has in recent months also cited financial pressures and fees as a reason for what it terms “learner attrition”. Its Meridian and Academy schools, which service lower-fee rural markets, have been particularly hard hit. Bad debts have practically doubled to 1.6% in 2017, from 0.9% in 2016 (and just 0.4% in 2014).

Beyond results of listed companies serving the upper-end of the market, one need only look around to see extraordinary levels of discounting and far quieter than usual malls (Famous Brands reports a “general downturn in foot count in medium and major malls”).

Major golf and cycling retailers, which held a handful of sales events a year, are discounting nearly permanently (one chain is starting its annual Christmas promotion this week). My “local” was busy for its October beer festival on Friday after work but last year, it was overflowing.

There is noticeably more accommodation and package holiday discounting than normal. In some cases, accommodation packages for the country’s top hotels and resorts (many owned and operated by the listed leisure players) are quietly being sold for the whole of next year at 50% of the normal room rate.

Walking around Rosebank on Saturday afternoon, I was struck at how “quiet” it was. Many of the more specialist apparel stores were completely empty. This was month-end weekend?

  • Hilton Tarrant works at immedia. He can still be contacted at
  • He owns shares in Famous Brands, first purchased in May 2013.

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hmm – who said “I want to squeeze the rich until the pips squeak”. well apparently no one (yet) – it was incorrectly attributed to Denis Healey (former uk chancellor). but I reckon I could see mr gigaba saying this while stepping into his bmw or whatever he drives. there was a comment made the other day that the looming downgrades will not affect the wealthy. utter rubbish will affect everyone – like when police can’t be paid

Bobby Boy – – – it must bring back awful memories talking about “the wealthy” – – – – – something you were in SAfrica before going to your new fatherland and working like a dog ever since.
I have followed your negative comments about SAfrica for some time now and all it shows me is that you should consult a good Pschyc there (if one could be found) and go tell your story to her.
Speaking for myself – I am tired of your stupid remarks where you are unkind to SAfrika and its people – shows me the type of user-person you are.
How long before you move to another country ???

U may consider it negative but a number of other commentators have now accepted this as being realistic

I can’t decide whether your bitterness is from lack of skills/finances to leave that “country” or fear of leaving your “comfort zone”…

I, like “Bobby Boy” left that dump because tyrannical black racists!

I can’t decide whether your bitterness is from lack of skills/finances to leave that “country” or fear of leaving your “comfort zone”…

Best is to ignore old Robert’s inane comments.He clearly has a problem and too much time. Probably lives in Orania.

Robert (Bob), I think in your uniquely weird way, you make a lot of sense. It has been unthinkable before as a Black person to contemplate emigrating. Now I know of a lot of my colleagues and friends who are eager to do this. I am on brink of doing exactly that, for my kids and our peace of mind. It doesn’t look good folks, and I hope I’m wrong here…

I hope I’m wrong here too… If you voted ANC, please stay exactly where you are. We don’t need the first world destroyed with that mentality.

Have you seen what some of these so called restaurants/cafe’s want to charge – toasted cheese and tomato R54.00!!!! avo, house pesto, roasted tomatoes on rye R65.00!!!!!! Crazy!!! anyone who pays that will never be wealthy!!!!!!!

So what do people expect. We are being taxed to death and have to provide most of our own services also. If Gigaba can add up he will look at the tax demographic and realize how such a small number of people make up the bulk of income tax and that the S.A. budget is MASSIVELY re-distributive to the point of being unfair.

Any more will just kill everything. People talk about a utility death spiral well SARS is in that movie with a diminishing number of people paying more and more. I thought I was too old to leave this place but it is getting to the point that financially I may have to.

You won’t be sorry. If you are afraid of the high exchange rates, you can always opt for places like Uruguay. Peaceful and clean… Just like the “old” South Africa.

Perhaps a radical idea coming from a Millennial, but have you considered that maybe the culture in this group is just changing? Before, I may have supported these restaurants and visited malls all the time, but nowadays I avoid malls like the plague. The moment a pleasant little restaurant becomes a franchise or opens multiple branches it loses its charm and I stop going. Looking at Pretoria, there are multiple super-busy and unique restaurants and coffee shops opening almost weekly, but they are not in malls and they are not franchises. I can still afford to shop at Woolworths but I prefer to support the green grocer around the corner rather than this corporate giant that package fruit and veggies in plastic that devastates the environment. I might be naive, but I would love if places become smaller and more personal again and I can walk from one cafe/artisan shop to the next in a bustling street that has been rejuvenated by capital for the enjoyment of all South Africans. Money that would otherwise have been spent to do another acquisition, build just another isolated mall or private golf estate prison. If the decline in sales of franchises and feet in malls are because of a growth in small business and moving to more integrated pedestrian-friendly towns and cities I don’t bemoan it one second.

Could NOT agree more, and that is something that famous brands loves doing.
They find a charming little resturant or good idea and they make it a commercial prostitute!
Tashas and turn n tender are two prime examples, and I think salsa is too?
Was it not just the one branch in fourways for like forever?
Now they’re popping up in at least 3 different places.

That’s why i LOVE the Natal midlands too.
So many charming quaint little places that not too mnay people have heard of with loads of charm and good food!

There is a huge over-supply of retail shopping malls in South Africa, along with pressure on franchise chains to open more outlets in these malls. But the consumer is not coming along with a full wallet, partly because of the state taking too much in taxes. result: this sector contributes to the low national economic growth rate (0.7%).

I’m in my mid 40s and am guilty of making fun of millenials from time to time, but I absolutely agree with and support stanleyb’s comments!

Or because people are realizing that R50/60/70 for a piece of toast and a thin layer of avo is just not worth it.
As for “Catch” – omg, I’ve had better fish n chips at a really lowly looking corner cafe or fish-aways then at that “upmarket” restaurant in Umhlanga!

However, their upmarket offerings are not all that, but turn n tender still a firm favourite!

Funny enough, you can find at least three of those in Chartwell drive in Umhlanga……so how bad is it really?

2017 saw a tax hike from 41% to 45%. That is a big jump.

Indeed, with the high tax rate I am strongly considering taking extra unpaid leave, maybe only work 4 days a week. I get a 50% longer weekend and pay less tax.

Making too much money and being forced to take unpaid leave, now that is a problem I wish I had 😛

@PJJ. Are there people who live on 20% lower income than you? If yes, then you too can work only 4 days a week.


As someone in his 20’s that just recently bought a house I need every single cent of income I can get my hands on, but I see your point, if I where much older and had more passive income and less debt then I could see myself only needing 80% of my then salary and enjoying the extra days off.

Worse was dividend tax – that went from 15% to 20% a 33% increase. Oh and capital gains tax went up alongside marginal tax.

End result it that now investing and selling your business is like paying the highest marginal tax rate! So little tax incentive to create a business.

Hi earning individuals are channeling their funds into settling their debt. They also not taking on anymore debt. They have cut the spending and being sensible with money. I have this on good authority from a banking insider. Banks are battling to hand out credit to these folk and its hurting the banks.

True. Last year I took out R85 000 loan and credit card owing R22 000. As from June this year I made a decision to pay back every cent. I can tell you loan account is now R11 500, credit card R12 500. I will finish paying in January. Crazy huh but tell you what its better this way then paying lots and lots of interest cos my understanding the worse is yet to come.

The way I see it is that the wealthy do not want to dine at copy and paste chains like Tashas, Vovo Tello and Turn and Tender. There is a plethora of good independent restaurants that serve better and healthier food at lower prices. Famous Brands has a nasty habit of gouging customers with prices that it thinks is the norm. Add in a supply chain that is milking the franchisees and you get the picture.

I for one refuse to eat at any of the groups eateries and fast food joints and so do many other well heeled consumers.Where is Henderwick now to give us a smirk and a good story?

Hedderwick abandoned the ship just in time. I spent the weekend at Umlhanga and walked into a Catch for the first time ever. The prices shocked me – a meal for three with only one glass of wine and a bottle of mineral water, came to with tip a little over R700.00 The fish was inferior to Helderkruin’s “George’s Best Fish and Chips” and the price almost double.

Catch will definitely not Catch me again …

Surely by the suicidal economic actions of Government and the madness of Zuma that is the aim of the ANC: The impoverishment of the citizenry in the mould of that great African leader, Robert Mugabe.

The “wealthy” isn’t struggling. The “wealthy” just doesn’t can’t afford to change their spending lifestyle… In comes the money, out goes the money and no growth in assets.

My wife and I maintain an Income vs Expense ratio of 40%… this results in us having 60% in disposable income. We are also debt free, and have an emergency fund of 4 months of expenses.

We live a minimalist, frugal lifestyle – we might be mocked and ridiculed for living this way, but it pays off (no pun intended).

Two quick questions!

1. Struggling from what?
2. Lastly, Where?

Perhaps the wealthy are not struggling, they are just being more sensible with their money…perhaps being a bit more conservative to better prepare themselves for the inevitable hikes in taxes and vat, not to mention inflation outpacing salary increases.
At least, that’s what i’m doing. Not that I’m wealthy. Never heard of any of the restaurants mentioned in this article!

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