Cuba Cracks Down On Operators Who Don’t Use Government Suppliers

Havana’s city government has temporarily suspended issuing licenses for new private restaurants in the Cuban capital and warned those already in operation to obey tough regulations to avoid closure or tough fines.

Since President Raul Castro loosened restrictions on small businesses six years ago, there has been a boom in the growth of private restaurants, known as paladares, especially in Havana, which boasts higher incomes and a growing influx of foreign tourist with cultivated tastes and expectations. There are hundreds of paladares in Havana and more than 1,700 across the country, according to the tourism ministry.

According to state regulations, paladares may only have a maximum of 50 seats and must buy all their supplies at state-run retail stores and markets, often at huge mark-ups, unlike state-run competitors which have access to wholesale markets and no seating restrictions.

Many buy cheaper products on the black market. That violation as one of many cited by officials; the list also included not paying taxes, labor code violations, and locations with more than 50 seats. Other alleged violations were bars masquerading as restaurants, staying open after 3 a.m., disturbing neighbors, dubious sources of capital and illegal purchases of buildings.

Operators say they are bracing for inspections. “We are checking everything, doing a total audit, figuring out what to do if we don’t have a receipt for a piece of equipment,” one Havana paladar owner told Reuters.

The more stringent enforcement of regulations might be bad news for the tourist season. Starting in December, thousands of Americans will descend on Havana as U.S. travel restrictions loosen and direct flights between the two countries begin after decades of Cold War enmity.

Last season, foreign visitors needed reservations for lunch or dinner at popular Havana eateries which were openly violating the 50-seat rule to accommodate more clients. If private restaurants are forced to restrict seating, more tourist will end up where the government prefers: in less crowded state-run and hotel establishments.