Covid-19: One in Four Brazilian Bars and Restaurants Permanently Closed Their Doors

RIO DE JANEIRO, BRAZIL – Of the over one million bars and restaurants in Brazil, approximately 250,000 have permanently closed their doors as a result of the novel coronavirus pandemic.

In the city of São Paulo, 20,000 of the more than 70,000 existing establishments have closed, according to a survey conducted by the Brazilian Association of Bars and Restaurants (ABRASEL), between August 18th and 20th throughout Brazil.

In Belo Horizonte, where isolation lasted longer, the proportion is higher. Some 4,000 of the 12,000 bars and restaurants, or one in three, ceased operations by August. The same occurred in the city of Rio do Janeiro: 30 percent of all establishments stopped operating, or 3,000 out of 10,000.

Currently, 73 percent of bars and restaurants in Brazil have restarted their activities, complying with the restrictions of each municipality or state, according to the ABRASEL. Of these, 18 percent are working only with food delivery or take-out orders. Approximately 38 percent are serving à la carte and only 21 percent work with a buffet.

The turnover is lower than expected for 71 percent of businesses. Revenues are dropping, as part of consumer spending has declined: for 39 percent, the average purchase is equal to or higher than before the pandemic. In other words, 61 percent of consumers are spending less.

With the drop in revenues, the number of jobs offered by bars and restaurants is also decreasing. Approximately 51 percent are working with less than half of the staff they had before reopening and 64 percent do not intend to hire for the time being, despite the return to activities.

The bar and restaurant sector comprises mostly family and small businesses, typically without sufficient working capital. A total of 89 percent of establishments are classified as micro or small-size companies and have a turnover of up to R$4.8 million (US$960,000) per year.

Restaurants have also found it very difficult to take out loans to retain jobs or keep the business running. Of the total number of respondents, 78 percent attempted to borrow and of these 43 percent were unsuccessful.

Among those who succeeded in obtaining some working capital, 56 percent did so through the National Program to Support Microenterprises and Small Businesses (PRONAMPE) line of credit, released in large Brazilian banks, and 14 percent through BNDES (National Bank of Economic and Social Development) loans for the payment of wages.

Source: Exame