By Wendy Anders

Costa Rica’s Chamber of Restaurants (Cacore) has teamed up with Quatro, a legal and tax advising firm, to aid current and prospective restaurant owners better manage their businesses, and improve profitability and sustainability.

Frequent changes in the economic environment, an oversupply of restaurants, and constant changes in legislation are the three main factors that can doom a restaurant in Costa Rica, said Cacore.

Cacore became concerned when they began research on the restaurant sector and discovered that the vast majority have a very low rate of return, with most averaging a 4 – 12 per cent before-tax profit margin.

Add on 3 per cent in taxes, profits become negligible, and add 8 per cent in withholdings, and cash flow becomes very tight, said Alejandro Madrigal, executive director of Cacore.

The new “Responsible Investment Program” can help an existing or future restaurant develop efficient administrative processes, effective management plans, and provide financial, tax and accounting plans to make their business sustainable over time.

Cacore’s initiative will work with clients to create a business from scratch including help with leases, suppliers, defining job duties, acquiring licenses and permits, and creating indicators to monitor and evaluate the restaurant’s operations in areas of administration, finance, management, and also aid in practical day-to-day matters such as creating a menu, and drafting marketing agreements.

“We are very concerned to see both a proliferation of businesses, and on the other hand a lot of businesses closing operations; this is due to a lack of understanding of the food and beverage industry. We must take action to support and to accompany entrepreneurs whose dream is to have a successful business,” said Madrigal.

According to Quatro legal firm, “It is not uncommon to find a restaurant that starts up without permits, hires staff without providing health insurance or workplace risk insurance, pays below the legal minimum wage in order to try to cut costs … practices which can end up with an eventual closure of the premises, and the owner being saddled with significant debts as consequence of fines, back taxes and overdue insurance payments.”

Through this initiative, entrepreneurs can build a solid base of operations that will allow their business dreams to flourish, said Cacore in a press statement.