• Costa Rica Real Estate

Another fast-food chain closes in Costa Rica

January 30, 2015

Last Saturday, the restaurant chain Bagelmen’s closed all of its locations in Costa Rica, laying off 110 employees.

Signs on Saturday morning placed on the doors at all locations read: “We are very sorry to inform you that as of today we will close our doors to the public. We appreciate your loyalty throughout these 14 years.”

The chain’s owner, Malcolm Matheson, “has not provided any official statement on the closure,” said Karol Fallas Estrada, director of the National Franchise Center (CENAF), part of the Costa Rican Chamber of Commerce.

Bagelmen’s — advertised as a healthy food restaurant — opened its first location in 2000 in Barrio La California, east of downtown San José. They then opened six more locations and had presence in three provinces, with five restaurants in the capital in San Pedro, Lindora, Rohrmoser, Sabanilla and Escazú, one in Heredia and another in Guanacaste.

The chain also sold products in supermarkets and to international hotel chains including Marriott, Four Seasons and InterContinental.

The closures add to that of the local franchise of Wendy’s, which closed operations on Jan. 9, citing low revenue.

Jorge Figueroa, president of the Costa Rican Restaurants Chamber (CACORE), said more closures in the local food and beverage industry are expected.

“The recent closures are a wakeup call for our industry, as the country’s current economic situation is very bad. The exchange rate, and high prices of electricity and fuel are affecting our costs. However, we also are surprised by recent reports of new franchises opening soon in the country. We are very concerned that companies are opening businesses here without proper studies on the domestic market’s actual situation,” Figueroa said.

Figueroa blamed the government’s lack of clear economic policies and strategies that are causing uncertainty in the sector and forcing entrepreneurs to postpone business decisions.

“Everyone knows that any time the economic situation gets difficult, one of people’s first decisions is to stop eating out. We’re seeing that,” he said.

The CENAF on Monday confirmed to The Tico Times the upcoming openings of local franchises of Venezuela’s OK Coffee and Peru’s Segundo Muelle, a restaurant. According to CENAF records, only two restaurant franchises closed operations here last year: Domino’s and Los Cebollines.

CACORE, however, does not have a record of how many local restaurants went out of business, “because they usually don’t report it,” Figueroa said. “We only receive a notification of their disaffiliation with our chamber, but that doesn’t necessarily mean they are closing.”

The franchise sector in 2014 grew by 12.7 percent, CENAF reported last December. Last month, two international franchisees announced new investment in the country: coffee giant Starbucks opened its fifth location, while U.S. pizza chain Little Caesars opened its first restaurant.

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