Crisis closes 40% of Brazil’s “pay-by-weight” restaurants

RIO DE JANEIRO, BRAZIL – The Brazilian Association of Bars and Restaurants (ABRASEL) estimates that 40% of “pay-by-weight” (“por kilo”) restaurants have closed down in the country due to the economic crisis triggered by the Covid-19 pandemic.

Brazil formerly boasted some 200,000 such establishments, and the current estimate is that this figure has plunged to 120,000.

In regions with high office building concentration, such as business districts restrictive measures and the large number of people working remotely reduced the flow in fast-food establishments.

According to ABRASEL, “pay-by-weight” or self-service restaurants, which were in high demand before the crisis, currently register less than 10% of pre-pandemic turnover.

Entrepreneur Renato Rezemini closed the doors of his “pay-by-weight” restaurant in a business district in São Paulo’s south zone, but managed to preserve another à la carte establishment, in which customers choose their dishes from a menu, but turnover is still low.

“I used to serve an average of 350, 400 meals a day; today I serve 40 meals a day, including deliveries. It’s virtually unfeasible, every month we dig ourselves a little deeper into the hole, a little more into the red,” he lamented.

Rezemini said that the delivery service is not a solution to restaurants’ problems, particularly when located in commercial districts, where the flow of people has greatly decreased due to remote work. “So there’s no one to deliver to,” he added.

The service sector has suffered the impacts of uncertainties related to the pandemic’s advance and the need for quarantine, to keep both doors open and jobs.

According to ABRASEL, such challenges are likely to persist even once the pandemic is over. “Depending on the situation, the working capital we had, our capacity, that will take three to five years,” said Joaquim Saraiva, president of the ABRASEL Board of Directors.

ABRASEL reported that approximately 335,000 bars and restaurants closed down permanently in the country, considering all segments, wiping out 1.3 million jobs.

Furthermore, 50,000 establishments permanently closed their doors during the pandemic in the state of São Paulo alone, 12,000 of which in the São Paulo capital, also taking all segments into account.

The bars and restaurants industry is among the sectors with the highest number of small entrepreneurs in the country, the majority of which are indebted. “Many establishments are small and even family businesses, which complicates debt renegotiation and the settlement of outstanding fiscal obligations,” said economist Thomas Carlsen, co-founder of Mywork, a startup specialized in human resources management for small and medium-sized companies.

Keeping her restaurant afloat during the pandemic is proving extremely difficult for entrepreneur Maria Teresa Dias: “We’re in a strictly commercial area, there’s only offices and corporate floors, and companies aren’t calling in their employees [for in-person work].” With today’s clients, Maria Teresa said paying bills as before is impossible.

The entrepreneur managed to negotiate with the property owner and is not paying rent for the restaurant at this time. An agreement with her employees also led to savings, in order to prevent layoffs.

Maria Teresa recalled that, before quarantine, on Thursdays she used to serve around 550 people. However, last Thursday she served only 36. “On Friday, I used to have a waiting line to come in. Thursdays and Fridays were my best days. And nowadays I’m closed on Fridays, because I don’t have a single customer.”

For Carlsen, the closing of doors not only represents a contraction in the economy, but also the extinction of millions of jobs, which is only adding to Brazil’s unemployment rates. “The survival of ‘pay-by-weight’ restaurants and so many other ventures in the sector is directly dependent on faster vaccination,” he added.