The Coronavirus pandemic has been wreaking havoc in Brazil for more than a year now, hitting the country particularly hard in 2021. Despite Brazil’s somewhat hefty immunization program, there’s been vaccine supply shortages due to the federal government’s lack of response when contacted multiple times by global pharmaceutical companies last year.
During the pandemic, some state governments have been imposing color-coded restriction phases (purple being the strictest, and yellow the most relaxed). During the purple phase, coffee shops are hit hard because not even pick-ups are allowed—only deliveries. As much as customers are used to buying coffee beans from their neighborhood coffee shops, there’s only so much they can buy. For small businesses it has been extremely challenging to keep up with the restrictions. Owners must constantly watch the news and anticipate pandemic trends—if they see a holiday coming up, they already know a stricter restriction might follow, for example. I spoke with some coffee shop owners in São Paulo, Brasília, Vitória, and Belo Horizonte to assess how they feel about running their businesses during the second year of the pandemic.
Tiago Damasceno, from OOP Café in Belo Horizonte, believes that they are reaping the benefits of a learning curve from 2020. One of them is that the instability is a constant—there’s no way to make a reliable prediction, the scenarios are changing incessantly and very intensely. “We thought last year the number of deaths was nerve-racking. We never knew what we had coming.” Despite starting to observe some behavioral trends, he feels it’s hard to make long term business strategies because everything must be revised in a short-term basis.
Damasceno explains that OOP had to become more than a coffee shop, and it now is sort of small market too. They made changes to the menu to adapt to the new space and entered iFood, an online delivery platform. They were able to get a loan from the government and revamped their space, occupying the sidewalk with tables made with repurposed wood taken from part of their counter. They moved their roastery—which was in another space—to the back of the cafe, streamlining their operational costs. He explains they had to sit down, listen, and understand who their online customers were and what they wanted. “When there are lockdown periods, part of our sales will migrate to iFood, but of course it’s not the same. Today our revenue is around 60-70% of what it was before the pandemic (when we are open), and around 40% when there’s a lockdown—if we are lucky,” he adds.
Damasceno recognizes that online sales are part of their business today. It’s something that they always tried to run away from, but now he sees it as crucial to their survival. “Our product remains the same, we keep believing in the same things, but the path to deliver it to people has to be another right now. For those of us staying in the market, we need to be brave, and we need to stay strong and react fast to whatever comes our way.”
In Brasilia, Lucas Hamu, the owner at Objeto Encontrado, sees 2021 as a better year for the business itself because at Objeto they are more focused. “In 2020 we were trying everything at the same time, shooting at the dark. Now, our customers are used to our delivery system, we have our regulars for both delivery and takeout, and we are learning to predict our revenue in all situations: just delivery, delivery plus takeout, and totally open,” he explains.
One good relationship that came out of the pandemic is that Hamu got closer to the MST (Landless Agricultural Workers Movement), so now Objeto offers their meals based on the seasonal ingredients they supply, and sell their products at the cafe. Hamu adds that meals were crucial at keeping their heads above water. Hamu also used a federal government program that assisted businesses in paying full time salaries for employees while employers reduced work hours by up to 70%.
Hamu recognizes their situation is not bad altogether in the general context, as they are privileged to have access to bank loans, and have family members who could support them with loans if needed. He explains that a lot of their clients are federal government employees who have a steady income, so he feels rather uncomfortable complaining too much about his business situation. “There are other businesses at a much more precarious situation, with much less communication skills and thus less outreach capacity. We have clients who offered donations—asking nothing in return—to lift us from our financial issues last year. It’s not every company that have what we have, and I feel very fortunate. I see the overall scenario as becoming particularly worse in the country but Objeto is relatively safeguarded, thankfully.”
Rodolfo Herrera, from Takko Café in São Paulo, explains that in March 2021 they experienced the same feeling of being lost they felt back in March 2020, except this time they had no savings, and customers are wary and reluctant to spend due to the current health/economic crisis we live in. He adds that Takko had a lot of difficulties in getting a loan from the federal government. They had just moved into the new space when the pandemic hit. “It still feels like we never got to open our new space.” Herrera explains they opted not to work with any of the available delivery apps, so the customers order through Instagram DMs and then they have a bike courier from their neighborhood do the deliveries for them. “It is a very manual delivery system and takes a lot of time from us,” he adds. “In our best moment during the pandemic we reached 80% of what was our revenue before the pandemic. Right now, we are at 40-50% of our revenue. Many independent shops are closing, and we see some franchised coffee shops are coming to our neighborhood, which feels strange. I don’t know what the impact of this will be yet,” he adds.
Back to Belo Horizonte. The pandemic forced Rafael Quick to go online and therefore outside Belo Horizonte, and so out of a sudden a lot of customers from São Paulo showed up. They also organized their own delivery system twice a week within Belo Horizonte, which is something Quick plans to keep even after the pandemic. Jetiboca launched a specialty coffee line that gained a lot of attention due to the pandemic—the packaging is different too, coming inside an aluminum can—gaining a market share amongst specialty coffee connoisseurs. “Before the pandemic, we sold 80% of our coffee ground and only 20% as beans. Now, we sell 20% ground.”
Quick explains that Jetiboca’s coffee shop was less impacted than other businesses because they have small operational costs. “It’s hard to follow these open/close mandates from the government because we can tell it clearly changes the consumption behavior. Also, the way we were constructing our business was based on offering an experience. It had our history connected deeply with Minas Gerais. Once we realized we lost that physical contact, we tried to transfer some of that to our packaging. That’s a lot different from what we had in mind before. We had a brand experience before that we had to change because of the pandemic so in that sense we are looking forward to opening our store again,” he adds.
Vagner Benezath, from Vitória (capital of Espírito Santo estate) and owner of Kaffa coffee shop, feels pessimistic about this year. Kaffa started delivering their coffee selection and food items through delivery apps and will probably keep that going after the pandemic. Benezath is not a big fan of delivery apps but found himself resourcing to them to reach more consumers in Vitória. He tells me he feels frustrated because he had to give in and start doing delivery, otherwise they wouldn’t be able to keep going. “The government restrictions change on a weekly basis here, but we adhere to the strictest one and keep it like that throughout the month, to keep our staff safe. I also feel that the ‘buy local’ was a fallacy. People quickly started buying from the cheapest sources, at least here in Vitória.”
Paulo Filho from KOF, in São Paulo, says that every time he sees a lot of people in the streets, he and his partner Camila Romano start to get worried, because they are certain of a new wave, and new lockdowns as a result. KOF no longer allows orders at the counter nor access to the patios or the back of the shop, and only one staff can talk to the customers. Today, they offer just espresso-based drinks and batch brew coffee, to be more efficient. Customers need to pay upfront, which Filho believes inhibit consumption, but they chose to do this to limit contact between customers and staff. KOF chose to have their own e-commerce on their website as they don’t believe in the delivery apps business model. They also had to change their menu according to the yellow, purple and red phases. “Some products don’t travel well through delivery,” he says.
Filho recalls that in the beginning of the pandemic, they sold vouchers for posterior use and he says clients that didn’t even live in Brazil anymore bought them to help out. “Also, many clients waited a lot of months to use the vouchers so we could pick ourselves up before using them. It’s a bit scary to think that we were able to survive—and are still being able to go through it—because we had a very solid base of customers and also some savings. Had it happened under three years of business, I don’t believe we would be still here,” Filho reflects. “We were always very conservative with our expenses, saving for a rainy day and that I think just a few coffee shops do that. That made us feel more secure to not resort to measures which would go against what we believe.”
Juliana Ganan is a Brazilian coffee professional and journalist. Read more Juliana Ganan on Sprudge.