Sunday 24 September 2023

Crisis drowns restaurants and bars as entrepreneurs struggle to survive

During 2020 the sector had to reinvent itself to assimilate the coup of the covid-19; However, the pandemic left a deep scar, about 30% of the businesses did not reopen their doors

Paying the bills


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23 September 2023 - At The Banks - Source: BCCR

Paying the bills


QCOSTARICA – During 2020, the bar and restaurant sector had to reinvent itself to assimilate the blow caused by the covid-19 pandemic and stay alive. However, the crisis arrived and left a deep scar, about 30% of the businesses will not reopen their doors.

Sanitary measures to contain the spread of the new coronavirus leave consequences for restaurants and bars. Working with a reduced capacity, for example, reduces the volume of sales. Photo: Alonso Tenorio.

This was estimated by Jorge Figueroa, president of the Costa Rican Chamber of Restaurants and Related Products (Cacore).

To cite some examples, the iconic Caccio’s pizzeria, located in the so-called Calle de la Amargura, in Montes de Oca (San Pedro), closed its doors definitively in 2020, after almost three decades of providing services in the surroundings of the University of Costa Rica (UCR).

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The Casa Dominga restaurant will move to Barrio Escalante as part of a new, more simplified business model, and will now bet on delivery or pickup (option to order and pick up).

“In Plaza Antares, for example, which is by the Rotonda de la Bandera, gone are Spoon, Chilis, Tacontento, and others, only in that square. If you go to that square now there is no business except the Novillo Alegre, all the other stores are empty,” explained Figueroa.

Now, after almost ten months of getting around the sanitary vehicle restriction, the low demand in consumption, and the constant closures, and although the distancing measures have been softened, the outlook for the sector continues to be cloudy and business owners cry out for greater openness.

Sanitary measures to contain the spread of the coronavirus left its consequences in restaurants and bars. Working with a reduced capacity, for example, decreased the volume of sales and therefore, revenues.

Figueroa, who is also a partner owner of the Peruvian food restaurant Chancay, explained that in his case, it was not enough to remove half of the tables to reduce the capacity to 50%, because when he measured the distance between one table and another, he did not comply with the 1.8 meters distance, which established the Ministry of Health. To meet that distance, he could only use 30% of the tables.

The payment of the rents was another drag for the entrepreneurs, some obtained reduced rents or the owners requested a percentage of the gross sales, instead of a fixed rent.

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However, others did not have the possibility and had to close their operation. Such was the case of the Caccio’s pizzeria.

Elliot Campos, owner of the Caccio’s, said that he could not reach an agreement with the landlord for a lower rent, despite having been leasing it for 20 years. However, he is still struggling to keep afloat the other three stores located near the Universidad Latina, in the La California neighborhood and in Moravia.

“We are struggling with the issue of double taxation on Uber Eats. We wish that we are not charged advance income tax withholding when paying by credit card. The restaurants have little liquidity, imagine that (the Ministry of) Finance retains a percentage of the income tax, they should eliminate the withholding and that it be paid later,” Campos said.

For the owner of Caccio’s, the vehicle restriction should be even throughout the week. Starting on Monday, January 4, for the month of January, the vehicle restrictions restric vehicles with odd ending license plates on Saturdays and evens on Sundays during the day (no such restrictions were in place in December) from 9:00 pm to 5:00 am, will drain the sector’s income.

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In April, a special bill to take the edge off rent payments for housing and commercial premises was convened due to the national emergency, declared by covid-19, but the initiative did not find consensus in the legislative process.

Reinvent yourself to survive

Both Elliot Campos and Ricardo Ruiz, pastry chef-owner of Casa Dominga, agrees that since 2019 they already felt an air of crisis because people were not spending so much. This situation worsened with the arrival of covid-19.

But just as there are restaurants and bars that did not resist the crisis, others have reinvented themselves to give continuity to the business. This is the case of Casa Dominga, which this month opens its doors in Barrio Escalante, a gastronomic area with easy access for customers.

The change is due to the fact that Ruiz sought to restructure the company, lower costs, simplify the operational part (with a smaller store, easier to clean), and a better location to bet on express service and pickup.

During the longest period of confinement, Ruiz found that home deliveries and the pickup could be part of the long-term business.

“The change is to keep employees, I have not wanted to fire anyone because it costs a lot to find a good team. These are people who have made an effort along with me, who provide good service and quality. It is easier to say: the operation is reduced, but you have to continue with high standards and think that better days will come,” reflected Ruiz.

Currently, this restaurant employs five people.

Restructuring the business allowed Casa Dominga to stay alive; However, changing locations implied an economic investment in the midst of a recessive environment. Ruiz made use of his savings to pay for the new premises and modernize.

During the restructuring, the businessman had to deal with the red tape, one of the structural burdens that has lagged the productive sector for years.

“It cost me more in permits and stuff because the bureaucracy kills any business. That turned my hair gray,” he said.

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"Rico" is the crazy mind behind the Q media websites, a series of online magazines where everything is Q! In these times of new normal, stay at home. Stay safe. Stay healthy.

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