656. In Cuba's Hinterland a Business Is Born

The Magno Restaurant in Guaimaro

By Marc Frank, Reuters, January 10, 2012

Guaimaro, just one of many small poor and dusty towns along Cuba's sparsely traveled central highway, is best known as the spot where the island's first constitution was signed during the independence war with Spain.

These days the talk of the town is about a different sort of independence in state-dominated Cuba - the privately owned Magno restaurant, the most luxurious place in Guaimaro. Its owner Tomas Mayedo Fernandez is a local boy who once did jail time for involuntary manslaughter but now, in just over a year as an entrepreneur, is a big success.

The eatery is one of more than 1,000 home-based restaurants, or paladares, that have opened on the Communist-run island since restrictions on small private businesses were loosened in late 2010, as part of a broader reform of the Soviet-style economy undertaken by President Raul Castro.

A meal at the Magno will cost you the equivalent of a few dollars for a beer and sandwich to $10 or more for steak and lobster, in a land where the average wage is less than $20 per month.

There are just two other private eateries and a few shabby looking state-run restaurants in Guaimaro, located 400 miles east of Havana. But they cater more to the local population rather than passersby and do not boast air-conditioning, lobster, shrimp, beef, whiskey and aged rum.

"I didn't know anything about running a restaurant, but I liked the idea of going into business and so when the law changed I began, little by little," said Mayedo, a strapping young man and son of a cattle rancher in his mid-30s.

Mayedo lived in the second story of the once-crumbling, century-old building. He sold clothing from his living room to make ends meet and looked down on the ruins of the empty store front and big back yard the neighbors had turned into a garbage dump.

SEEING THE POTENTIAL

The place nevertheless had potential because it fronted the central highway, giving it access to a larger customer base than just the small town, he decided.

"We were already working to clean the place up before the law changed," Mayedo said recently, taking time off from his chats with arriving suppliers and his pacing back and forth with mobile phone in hand.

He began with a small cafeteria, but then on December 10, 2010, he opened the restaurant beside it. His plans did not stop there.

"We also have a jewelry repair shop and in two or three years I want to build a place in the back to rent out rooms," he said.

Like the rest of Cuba, many of Guaimaro's residents have family living abroad, especially in Florida, and as luck would have it, President Barack Obama lifted restrictions on Cuban Americans visiting their homeland just a few months before the Magno opened for business.

Over the recent holidays the town - where legs, bicycles and horse-drawn buggies are the main form of transportation - was dotted with rental cars, many of them driven by visiting Cuban Americans who wanted to treat their relatives and friends to a nice meal while out on the town.

There was only one place to go - the Magno, which has become a sort of destination restaurant that is well known in the area.

"December was by far the best month we have had," Mayedo said.

His wife Yaima Lopez helps run the Magno, while his aunt, a retired state economist, takes care of the books. Two cousins, with some cash earned working in Angola, where thousands of Cubans work as doctors, construction workers and teachers, lent him the seed money.

"I'm paying them back little by little, but they don't pressure me," he said.

The hardest times were when Mayedo waited for his clientele to build up and worried he might go bankrupt.

"Like all businesses the first year or two are the most difficult. And this is the countryside, not the capital where there is more demand. Here we depend on the people who pass by on the highway," he said.

THE TAX MAN COMETH

As his business has grown, Mayedo has added eight full-time employees to help operate it.

The biggest challenge has been training a workforce that is disciplined and pays attention to details, he said.

Mayedo said he has had no serious problems with the government, is grateful for the reforms underway and believes they are here to stay.

"I thank them for giving us the opportunity to demonstrate to ourselves that we are capable of doing this well," he said.

"No state can subsidize an entire population, it is impossible. Furthermore, we provide jobs, pay taxes and help the economy in a big way."

Mayedo doubted he would become a millionaire any time soon because, despite the reforms, there are still limits.

"The system is designed to allow us to keep living, not become rich. But yes, my life will keep improving," he said.

In a land where everyone worked for the state and there was no income tax until recently, one is now being levied on hundreds of thousands of small businesses and farms that have appeared due to Raul Castro's reforms.

Mayedo said his aunt was preparing his first income tax return even as he spoke.

Now that was something to worry about at a sliding scale of up to 50 percent of earnings, Mayedo admitted, but better to pay 50 percent of earnings than no tax on no earnings at all, he said with a shrug.