Restaurant operators are sailing on troubled waters

Times are hard for Costa Rican restaurants. Even owners admit the field is saturated with new restaurants opening frequently.

One estimate is that in the Escazú area alone there are 1,600 eating places, ranging from five-star, elegant locations to humble sodas. An Internet search for Escazú restaurants produces 108 results, but some are marked closed.

Each week there are announcements that restaurants or chains of restaurants are closing. The latest are the Wendy franchise and the seven Bagleman’s outlets. Each closing represents a different story, but many agree that the weight of social security charges, aguinaldos and other mandatory payments are a burden.

Some restaurant workers note that much higher fines for drunk driving have reduced the lucrative sale of alcohol. Expats are among those very aware of the higher penalties, and some police have been known to stake out expat eating and drinking locations to extort money from under-the-weather drivers.

A walking tour of restaurant locations by reporters one Friday evening showed that some had little or no business. Even in upscale Avenida Escazú an equally upscale restaurant had three single male diners eating at separate tables. That is not enough to make the rent, which may range for some firms up to $12,000 a month.

A walking tour of Plaza Itskatzú showed only a few restaurants with a reasonable amounts of diners. Some restaurants had no customers during the peak dining hours. Several restaurants had closed, but one location announced the opening soon of a restaurant with Middle Eastern cuisine.

Editors are quick to suggest that restaurants are in trouble because they fail to advertise. That certainly is the case with Bagleman’s, which hardly ever advertised in English-language print or online outlets since it began in 2000.

This is a good argument because frequent advertising does bring in the customers and can highlight daily specials or holiday offerings. McDonald’s is a good example.

Still, there are restaurants that market in other ways. A few downtown rely on agreements with tourist agencies that bring

in busloads of diners several times a week. Other restaurants have prominent locations and good reviews in travel guides.

Still others are famous for providing a unique dining experience.

And yet others bring in the customers with lots of food and lower prices. One of these outlets is the well-known La Casona de Laly in Escazú Centro. The place in an ancient private home has uneven floors and tables that are hardly elegant. But the place was full Friday night with a procession of expats and Ticos. Four people could eat well for a 23,000-colons (about $44) bill that included a couple of beers.

Restaurants just got hit with the tax agency’s ruling that credit card processors must remit to the government 2 percent of every credit card transaction. The bite was lessened when the government realized the surcharge would include taking a piece of sales taxes. So the percentage became 1.78 percent.

Restaurant operators still are not happy because the law requires them to add 10 percent to a bill for a mandatory tip. This money goes to the employees and not the management, but the tax agency, the Dirección General de Tributación, still wants a percentage if the bill is paid with a credit or debit card. Presumably the surcharge will be credited against future income tax payments, if any.

That amount may seem trivial to most, but in the case of a big wedding party or other large gathering, perhaps with music and plenty of alcohol, the mandatory tip is large and the amount remitted to the government includes a percentage until the government realizes it has made a mistake.

Restaurant officials have been seeking some form of exemption since October, one said.

In the meantime, good business practices would mean ratcheting up slightly the amount charged to the customer to compensate for the romance012615governmental bite.



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