Puerto Rico's restaurants carve path to recovery

Puerto Rico's restaurant industry is slowly rebuilding a year after two hurricanes ravaged the island, generating much-needed jobs and private sector investment.

The Puerto Rico hospitality industry lost more than 10,000 jobs in September of 2017, according to the Bureau of Labor Statistics. By July of 2018, hospitality employment had recovered to November 2016 levels, led in large part by small businesses.

According to a 2016 survey by the Federal Reserve Bank of New York, 80 percent of private sector employees in Puerto Rico work for small businesses.


For some restaurants, the aftermath of Hurricanes Maria and Irma has provided opportunities for growth.

Victor Lebrón, a restaurant owner in San Juan, doubled his square footage and hired new staff eleven months after Maria decimated the island.

“Well, it was very difficult. But when you are a fighter — I would wake up at three. Many times I wouldn’t even go to bed. I would go to Costco. I would close at 10 p.m. and at 11 I’d be in line at Costco," said Lebrón.

In August, Lebrón moved his restaurant, Boccado's Divino, from a working-class neighborhood near San Juan's Luis Muñoz Marín International Airport to a location in the ground floor of the Bar Association of Puerto Rico in the upscale Miramar neighborhood.

But in the months after Maria, many restaurants faced obstacles that forced them to close.

"In fact many fast food places, they had to close. They are franchises and they just had to close, could not handle it," said Clife Rocha, the manager at Boccado's.

Like Lebrón, restaurant owners were forced to line up at warehouse stores to buy any food available, and redesign their menus daily based on what they could buy.

Xavier Toro, the owner of Rare 125, a steakhouse in San Juan, said supplies were scarce and expensive, and the usual purveyors would not provide raw materials on credit -- a typical practice in the restaurant industry.

Plus, restaurants had to deal with electric blackouts and shortages of cash.

Toro could only operate for a few hours a week, as he had to share his building's generator with two other companies.

Toro said his restaurant kept running because he and his partners were able to pony up the cash to keep the kitchen functioning.

But many businesses closed, leaving thousands of employees without pay, because they couldn't operate on a loss.

Still, a study by the Foundation for Puerto Rico (FPR) -- a non-governmental association incubator -- showed those small businesses needed relatively little capital to keep running.

According to the Federal Emergency Management Agency (FEMA), 40 to 60 percent of small businesses don't reopen after a disaster. Short term loans have improved those numbers after other disasters, but Puerto Rico lacked the capacity to provide such loans.

A FEMA-supported Small Business Administration (SBA) program that provides longer term loans was shunned by small business owners who feared they'd be unable to repay.

FPR developed a grant program that disbursed just over $500,000 to 200 businesses, with an average disbursal of $2,520.

Of the beneficiaries of the program, 64 percent were in the food and beverage industry, and only 7 percent ended up closing.

Congress has allocated $20 billion in Community Development Block Grants for Disaster Recovery (CDBG-DR) through the Department of Housing and Urban Development (HUD) for Puerto Rico.

To date, $1.5 billion of those grants, which will be used for reconstruction in various industries, has reached the island.

An FPR report on the results of its grant program recommends leveraging those grants to protect small businesses from future disasters.

But business owners like Lebrón and Toro credit their creativity and hard work for keeping their restaurants open.

"I think people got a little bit more humble because we were used to have everything, and then we had to suffer," said Rocha.

"Everything changed. Before Maria, after Maria, it’s a different Puerto Rico. But the Puerto Ricans are really resilient, and they always see, I can say that most of the people see the glass half full, not half empty," he added.

Alison Spann contributed to this report.