Caracas Restaurant Boom Is Going Bust as Hopes for Revival Fade

Buzzy dining options were a semblance of normalcy for Venezuela, but they’re disappearing

(Bloomberg) — The Caracas restaurant boom once hailed as a sign that the beleaguered economy was on the upswing has fizzled.

Venezuela’s capital and major cities saw 200 formal restaurants open last year, the most in at least a decade, with almost half of the new spots catering to the wealthy elite able to pay upward of $50 a meal. Those who could afford it clamored for reservations at the most popular spots, one of which offered a table 160 feet above the ground suspended by a crane. The openings brought a sense of optimism after years of hyperinflation, sanctions and economic crisis.

Now, many of them are shut. Those still in operation are lowering their prices and cutting staff as a slump in consumer demand leaves tables empty. The resurgence seen after President Nicolas Maduro’s easing of economic controls has flagged, deflating an oversaturated market after the initial burst of spending caused by pent-up demand. The reversal highlights the limitations of Venezuela’s economic recovery as long as the oil industry, the country’s lifeblood, remains mired in disfunction amid a dearth of foreign investment.

“Setting up a restaurant is costly,” said Rafael González, who has stakes in three eateries, including a high-end venue that focuses on traditional ingredients from Venezuela. “But the main problem is the drop in demand. People are more guarded with their money.”

González recently had to fire half the workers in one of the restaurants he owns and tap his personal savings to pay those who remained.

The boom in restaurants took hold amid Maduro’s efforts to open up the economy. After years of economic crisis and out-of-control inflation, he moved to allow the dollar to be used across large swathes of the economy, unleashing entrepreneurship. While Venezuela was still burdened by US sanctions that severely limit multinational companies’ ability to do business there, Maduro seemed to be moving toward normalizing relations with the Biden administration.

For a while, that was enough to revitalize restaurants. In the early days of the boom, it was hard to get a table at buzzy venues such as MoDo, a spot in eastern Caracas that houses four separate restaurants, a bowling alley and a stage where cover bands play the latest hits as diners feast on $15 brie cheese salads and $9 Aperol spritzes.

But economic progress has been uneven since the initial optimism, with no letup in sanctions. These days, most customers at MoDo are walk-ins, and a discounted lunch menu draws workers from nearby office buildings. 

Restauranteurs eager to tap into the economic revival overestimated its scope, according to Jesus Palacios, a senior economist at Caracas-based financial consultant Ecoanalitica. 

An index of retail sales showed annual drops of 17.5% in January and 19.3% in February, the latest data available, and his firm calculates that the percentage of Venezuelans earning less than $100 a month rose to 53% at the end of last year from 30% six months earlier.

The industry is also dealing with rising food and liquor prices, with the annual inflation rate in bolivars near 500%, as well as overzealous municipal and federal tax collectors who have sought to take advantage of the boom by imposing dubious fees, payable in cash on the spot. 

Iván Puerta, president of the country’s restaurant industry association, estimates about 60% of the places that opened amid the boom will be closed in the coming months. 

Alejandro Pop opened an upscale restaurant during the pandemic, charging $15 for premium hamburgers. Business went well for a while, but demand started to dwindle in November, just as his landlord was looking to double the rent “based on the belief that ‘Venezuela is fixed,’” he said, referring to a common phrase used ironically on social media.

That wasn’t viable, so he closed shop. For his next venture, he went downmarket, opening a fast-food place in a busy mall. He says it’s been going well, making a steady profit by charging $7.50 for two burgers and a drink.

“Other opportunities have opened up,” he said.

Ernesto Martinez expanded his burger shop business in 2019, entering an underserved market after years of recession. He focused on using imported, high quality ingredients that reminded Venezuelans of better days. His business thrived during the pandemic by offering delivery. By the end of 2020, he had three locations in Caracas, one with a mini-golf course, and sold about 6,000 burgers a month.

“We were the kings of the burger,” he recalls from his main shop in a high-end neighborhood in Eastern Caracas, surrounded by refrigerators, tables, and kitchen equipment he now has for sale, after closing all his sites just a few weeks ago. “We didn’t think that this was going to be a short-lived entrepreneurship.”

Martinez said he didn’t expect competition to grow so quickly, especially in the relatively high-end segment that he targeted. In his shops’ final days, they were making 30 burgers a day. His monthly sales had fallen over 80%.

More stories like this are available on

©2023 Bloomberg L.P.