Impact of water crisis on the financial performance of fine dining restaurants in the Cape Town Metropole

Abstract

The fine-dining restaurant businesses in Cape Town are heavily reliant on the influx of Tourism. However, 2017/ 2018 posed significant a challenge due to the inevitable drought that left some Cape Town businesses on the brink of shutting down. Observing five-star restaurants urging customers to use the same cutlery for all the six-course meals motivated the study. In 2017, the water tariffs increased significantly, forcing many businesses to improve their water conservation efforts. The average bath water usage was significantly reduced to 60 litres per person. The increased water tariffs resulted in restaurants being desperate to find solutions to the problem without jeopardizing fine dining standards. This problem reduced restaurant businesses' dining capacity and eventually led to some restaurants closing down. The water crisis has compelled various businesses to devise methods to counter the problem. The study investigated the effectiveness of measures implemented by fine dining restaurants to ensure customer satisfaction, maximize profit and sustain businesses in the long term. The study embarked further on investigating the impact of the water crisis on fine dining restaurants' financial performance in the Cape Town Metropole. The method of conducting the study was through descriptive semi-structured interviews with fine dining restaurateurs. The nature and demands of this investigation made an exploratory research design appropriate for the study. Therefore the qualitative methodology was adopted for this thesis. Central to this study is discovering new methods implemented to deal with the water crisis and how the restaurant businesses adapted to the water crisis challenges. The study participants were restaurant businesses in the Cape Town CBD, and semi-structured interviews were conducted based on the questions drafted to meet the study objectives. During the interviews, the raw data was tape-recorded and later transcribed by the researcher. Once transcription of data was complete and to ensure that no manipulation of responses from the participants, then the presentation of findings was done in a verbatim format. The findings revealed that the challenging circumstances around the water crisis in Cape Town had compelled entrepreneurs in the hotel and restaurant businesses to appreciate the need to conserve water. The creativity and innovative strategies implemented by fine dining restaurateurs determined the business survival. The study also revealed that the water crisis hurt the financial performance of fine dining restaurants. The perceived impression created by the media about the water crisis in Cape Town motivated visitors that usually travel to Cape Town to stay away during this period, leading to a loss for restaurants. The significant issues mentioned in the findings that affected the fine dining restaurants' performance were the money spent on buying new water-saving equipment, high water tariffs from Cape Town municipality, and lack of government assistance. The majority of the participants revealed that they started buying water and power-saving equipment due to the water crisis announcement. One of the fine-dining restaurateurs went as far as installing 60 wind energies for both his businesses in front of the Hotel Verde in Cape Town Airport and proving to be a very costly strategy. Some restaurants closed big swimming pools and only operated with the small swimming pools, closed ice machines, one coffee shop was closed temporarily, use of disposable serviettes, reduced use of ice and used ice bricks instead of ice machines. The restaurant entrepreneurs even went as far as switching off some ice machines, removing bath plants, adding timers in the showers, buckets in showers for re-use by housekeepers, water bottles in rooms, and collecting used water to re-use for gardens. The introduction of the Arc Aqua system that uses an ultraviolet light spray to disinfect water, recycling of water, use of big steamers instead of boiling to avoid using a lot of water, installed boreholes, reservoir tanks, and massive water tanks were strategies employed. Despite the implemented water-saving strategies, the fine-dining restaurateurs felt more needed to be done to survive the long-term water crisis. The fine-dining restaurant participants recommended that the government build desalination plants to curb the water crisis, although this would be costly. The restaurateurs also suggested that the government try to meet them halfway instead of posing a threat to their businesses by forcing them to implement expensive water-saving methods without returns on their investments. The businesses should have contingency funds in place to boost survival during a time of crisis. The overall impression of the study was that it is not easy to survive as a small business during a time of a crisis, especially if there are no contingency funds in place. For an entrepreneur in an ever-changing environment, creativity, innovation, and sustainable entrepreneurship were vital to enhance competitiveness. Further studies will explore the impact of the water crisis on fine dining in South Africa.