Weekly Chart: Restaurateurs – Cuba's Most Popular Entrepreneurs

By Elizabeth Gonzalez

Restaurateurs make up Cuba’s largest group of self-employed cuentapropistas, but they have to bend the rules to compete in a growing market.

Havana’s eateries may be scurrying to serve wave after wave of tourists, but the city’s government has temporarily suspended issuing new licenses for private restaurants. On October 17, the city said existing restaurants are violating rules—such as exceeding seating capacity, buying from the black market, and evading taxes—and that it would begin an extensive auditing process before resuming licensing.

By the end of July, tourism to the island was up 12 percent from the same time the year before, including a surge of 43 percent more U.S. tourists. Some 1,700 paladares—as private restaurants are called—serve the island, with about 400 in Havana alone. Many restaurateurs bend the rules to compete in such a climate, given that paladares must purchase from the same retail stores where the rest of Cubans shop. “Beer barely lasts an hour on store shelves since restaurants buy them by the crate,” writes Lorena Cantó for Plus, paladares have to compete with state-owned restaurants that have wholesale access to goods.

“Havana’s private restaurant industry is booming. Talented chefs are getting more experimental in the kitchen, and the rising flood of tourists provides an endless stream of customers,” says Alana Tummino, head of the AS/COA Cuba Working Group. “It’s no surprise that Cuban officials are clarifying the rules for the city's fastest-growing and most successful cuentapropistas, especially given the at times tenuous relationship between the state and nonstate sectors.”

The food industry accounts for the biggest entrepreneurial group of the private sector, making up 12 percent of the more than 507,000 cuentapropistas (self-employed persons) as of March. But these entrepreneurs pay some of the highest taxes in a country that implemented its first comprehensive tax code in 2013. The 12-percent tax on private businesses employing more than five people can limit growth, not to mention a 50-percent income tax on self-employed persons making more than $2,000 a year.

In light of the news, AS/COA Online takes a look at the facts.