Number of bars and restaurants making losses in January increases by 60% in the country
By Editor*
Friday, March 8, 2024
The reduced movement, especially in cities with less tourist flow, caused 29% of companies in the bar and restaurant sector in Brazil to report losses in January this year, showing an increase of 60% compared to the 18% of businesses that closed in December 2023 “in the red”. This is what research published by the Brazilian Association of Bars and Restaurants (Abrasel) reveals. 2,128 businesspeople in the sector were interviewed, in all states of the country, between the 19th and 26th of February.
With empty restaurants or little public, it is impossible for business owners to continue paying high amounts of taxes every month to the federal government
Photo: Database/O Vale News
“January was a tough month,” said Abrasel president Paulo Solmucci on Thursday (7). “We were improving. In December, the sector had reached the lowest number of the year. This was cheering us up. But a big blow came in January.” According to the survey, 59% of the country's bars and restaurants had lower revenue in January than in the previous month. The drop in revenue helps explain the poor performance. In non-tourist regions, revenue fell by 10%.
In the first month of this year, there was a significant drop in the percentage of establishments that recorded a profit, from 48% in December to 34% in January.
The president of Abrasel highlighted that January suffered from the effects of rain that led many people to stay at home, with some cities flooded, including large centers. “It turned out that January was a tough month. It wasn’t good, no,” he assured.
According to Solmucci, the sector has 43% of companies with late payments. “This number has been stable for almost two years and we cannot improve it. In other words, four out of every ten companies in the sector are heading towards insolvency, because they acquired very heavy debt during the Covid-19 pandemic and are unable to pay it off”. Sixty-nine percent of these companies owe federal taxes and a quarter of indebted establishments owe labor charges. Another 28% owe public services.
“The situation needs a systemic look”, stated Paulo Solmucci. He assesses that these four in every ten companies that are heading towards insolvency need stronger help “because, otherwise, we will have a mass destruction, again, of jobs in the sector”. He highlighted that it is necessary to make a major national pact to recover the sector.
*Matter from Brazil Agency
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