States greenlight bars and restaurants. But many owners won’t open

. Jul 08, 2020
States greenlight bars and restaurants. But many owners won't open Closed restaurant in São Paulo. Photo: Jo Galvão

Bars and restaurants in São Paulo were allowed to open their doors this week as the city entered the fourth stage of its economic reopening plan, after more than three months in quarantine. However, for many owners, facing the operational costs and health risks of opening up for business without being sure that customers will show up is not yet worth the gamble. 

Some of the city’s most famous eateries — such as Arturito, run by celebrity chef Paola Carosella, and Rodrigo Oliveira’s Mocotó — have decided to remain closed, operating only on a delivery and takeaway basis. On its official Instagram profile, the Mocotó team said they will open their dining room “when we feel safe. We are taking care of both our health and that of our customers.”

</p> <p>Beyond the obvious health concerns of welcoming sit-in diners once more — as Brazil surpasses the mark of 1.6 million confirmed coronavirus cases, among them <a href="">President Jair Bolsonaro</a> — restaurant owners also have financial aspects to consider when deciding to reopen their doors.&nbsp;</p> <p>“Lots of restaurateurs are insecure and financially fragile. Many don’t have the means to reopen, even if they want to. They have to solve the financial issues to bring employees back and restock. Also, they fear being closed once more and think that customers may not show up,” says Percival Maricato, president of the São Paulo branch of the Brazilian Association of Bars and Restaurants (Abrasel), speaking to <strong>The Brazilian Report</strong>.&nbsp;</p> <p>As of April, consumption in restaurants dropped by nearly 64 percent, while revenues plunged by almost half in comparison to <a href="">estimates</a> based on 2019’s average for the period. Considering that the food industry makes up <a href="">7.7 percent of all commercial storefronts in São Paulo</a>, with average yearly revenue of BRL 32 billion, the economic toll won’t be restrained to the kitchens.&nbsp;&nbsp;</p> <div id="buzzsprout-player-4486823"></div> <script src=";player=small" type="text/javascript" charset="utf-8"></script> <hr class="wp-block-separator"/> <h2>A muddled reopening</h2> <p>The state government’s <a href="">reopening guidelines</a> establish that restaurants and bars may operate at 40 percent capacity, while demanding socially distanced customers to wear masks and have their temperatures measured. These establishments may only remain open between 11 am and 5 pm, and they are not allowed to set up tables on the sidewalk, in an attempt to avoid <a href="">agglomerations like those seen in Rio de Janeiro</a> last weekend.&nbsp;</p> <p>For Mr. Maricato, the latter two rules could have been more flexible, providing the municipal government carried out effective oversight to check every restaurant is compliant with health protocols.<br><br>“These opening hours do not work for those who serve breakfast, or pubs that work at night. We think they could keep the reduced time frame, but allow each restaurant to adapt it to their own necessities. Also, the sector believes external areas are less dangerous and what happened in Rio won’t happen here necessarily,” he said.&nbsp;</p> <p>Though the São Paulo government claims that the outbreak is now <a href="">more focused on the interior of the state</a> — as the city of São Paulo made up only 12 percent of the new cases recorded on July 6 — the population does not seem confident about leaving home. Social isolation levels in the city reached 46 percent on the same day, not far below what was seen at the beginning of quarantine measures, back in March.&nbsp;&nbsp;</p> <div id="buzzsprout-player-3212182"></div> <script src=";player=small" type="text/javascript" charset="utf-8"></script> <hr class="wp-block-separator"/> <p>In an attempt to boost customers’ confidence and improve restaurants’ awareness of protection guidelines, Gabriel Pinheiro, owner of pizzeria chain Villa Roma, has teamed up with food safety company Controlare to launch Approvid, a seal of quality for anti-Covid-19 practices.&nbsp;</p> <p>Restaurants can pay BRL 49 to take an online course, in which they learn 36 protocols to avoid contamination in their establishments, earning a bronze seal at the end. Then, they undergo physical inspection by Controlare, awarding them a silver seal, and can then earn a gold seal after a second inspection.&nbsp;&nbsp;&nbsp;</p> <p>According to Mr. Pinheiro, roughly 200 restaurants are already enrolled in the course. The goal is to establish partnerships with other industries, such as delivery and credit card companies, to sponsor the program.&nbsp;</p> <h2>Between a rock and a hard place</h2> <p>While remaining closed means giving up on potential revenue, opening up for business means bars and restaurants incur costs they may not have the means to pay, such as ingredients and employees.&nbsp;</p> <p>According to <a href="">data</a> provided by Brazilian statistics bureau IBGE, the hospitality and food services sector lost 22 percent of its workforce in the three months ending in May, ranking the worst among nine segments. In order to set up shop once more, restaurants will have to rehire these employees, which could become especially onerous if establishments are forced to close once more.&nbsp;</p> <p>Mr. Pinheiro managed to maintain his 40 employees by suspending their job contracts, as was permitted by the federal government’s <a href="">Emergency Program to Maintain Jobs and Income</a>. However, the program demands that employers should offer stability for employees for the same amount of time the contracts are suspended, a cost that Mr. Pinheiro fears he will be unable to afford for much longer.&nbsp;</p> <p>Villa Roma, as with many of their peers in the restaurant business, has attempted to keep <a href="">operations running with deliveries</a>, but have only been able to gather 20 percent of their usual revenue.&nbsp;</p> <p>“We chose to suspend job contracts because we thought quarantine wouldn’t last long, but our employees will have to return sooner rather than later. To keep them, we must earn some revenue until the halfway point of the month, otherwise, the other option is to delay payments to suppliers and taxes,” he told <strong>The Brazilian Report</strong>, adding that he was still waiting for approval for an emergency small business loan.

Natália Scalzaretto

Natália Scalzaretto has worked for companies such as Santander Brasil and Reuters, where she covered news ranging from commodities to technology. Before joining The Brazilian Report, she worked as an editor for Trading News, the information division from the TradersClub investor community.

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