An Insiders take of the restaurant biz in Ecuador

Something about Ecuador ignites the entrepreneur in all of us.

As my Ecuadorian mentor once told me, “people in Ecuador are more entrepreneurial than in a country like the US because they have to be, there are less decent employment options so you got to employ yourself. ”

I´d agree.

And this week, I´m going to interview my good friend Amir, who moved to Ecuador last year from Canada, and has since started a pizzeria in the Quito (Cumbaya) area.

I met him when he was a new arrival “right off the boat”, if you will.

Enter Amir… 

Amir, tell us about your restaurant?

Sure, the name is MegaPizza and we serve top-notch Italian-Canadian cuisine like pizza, putin, salads, subs, wings and more at reasonable Ecuadorian-style prices.  Specifically, we’ve got the best subs and pizza in all of Ecuador (Note from Domenick: I’d agree.).  The restaurant is right between the main park of Cumbaya and the San Francisco University in one of the top restaurant districts of Quito.

So Amir, why’d you choose Ecuador for living and your business?

Well, its warmer than Montreal, residency is pretty easy, taxes and rent are low comparatively and so are most of the costs of living.  In Canada it was too pricey to start my own place.  A restaurant like mine would rent for $4000 or more per month, utility bills would be several hundred dollars a month and employee costs would be several thousand a month.  In Ecuador, rent, utilities and employee costs are dirt cheap and you don’t have to worry so much about peripheal costs like insurance while at the same time I’m still charging about the same as i would in Canada for my product.

Why’d you choose Cumbaya for your pizzeria?

I like the warmer climate when compared to nearby Quito (30 minutes away) and it is an affluent neighborhood and lots of residences ideal for delivery.

What were your biggest challenges when starting and running the business?  

The biggest challenge was finding a good place to rent for the business.  It took several months of checking the Internet ads in Spanish, the newspaper and driving around scouting out areas.  A lot of decent places that were available were offered not by the land owner but by the restaurant owner who wished to sell you their business, furniture and lease, often for upwards of $60k or more.  When I already knew the business and knew what I wanted to do i was not interested in buying someone elses know-how and used equipment and furniture.

Finally, we found a large empty locale and inquired with the caretaker and found out it was available, it had no sign, thats how you can often find the best deals in Ecuador.

Also, obviously communication was an issue cause I don’t speak Spanish well.  I took a one-on-one class in Quito for about two months when I first arrived for $6 an hour and that has helped a lot.

What are the lease terms like for your restaurant in Ecuador?

Well, my lease is for one year only with a security deposit equal to one months rent.  The rent is $1500 a month.  The locale has about 6 parking spaces and 90m2 of dining area plus an outdoor patio with capacity for about 50 people (about 15 tables).

Where’d you find your kitchen equipment and furniture needed for the restaurant at the best value?  

Honestly, searching on the Internet in Spanish helped a lot. I knew what I needed cause I worked for many years as an employee of top restaurants in Montreal.  I found one distributor online in Ecuador where I bought most of my kitchen equipment PROMAINEC.  For instance, we bought all new stuff… a 2 door industrial fridge was $2200, the pizza oven $1700, the dough maker $1200, and the stove-grill-hotplate all in one from the LOZADA store in Quito was $1200.

The wooden tables and chairs were ordered custom maid by a local carpenter, they came to $36 for each table and $40 for each chair with a seat cushion built in.  Those were the best prices we could find, it was much better than buying ready made tables and chairs from a place like Megamaxi or Mi Comisariato.

What was the total investment to get your restaurant up and running from scratch?  

Including the security deposit for the lease, about $20,000 USD.

Where the permits difficult to attain?  What permits are needed for us newbies to the business in Ecuador?  

Actually, this part was very easy in Ecuador.  It all starts with the SRI (the IRS tax agency in Ecuador).  You need to get a RUC or tax ID number (free).  Once you have that you need to go to the IEPI or Institute that copyrights Intellectual property in Ecuador to register your company name and logo ($115).  Then you have to go the Municipal and apply for your LUAE or license to operate.  After application they will send inspectors to pass your business, first the firemen (bomberos) and then the health department (salud) and Secretary of Tourism.  After passing the inspections you can pay your annual Municipal patent (patente municipal) (varies by business type and location, around $100-250 annually).  A special license to sell liquor does not seem to be necessary in Ecuador from what we have gathered (we’re still confirming this one).

Where do you source your ingredients and food?  Whats cheaper and whats more expensive compared to Canada?

This part was more tricky in Ecuador than in Canada where one phone call can get you everything you need within a few hours.  The big things like flour and cheese we buy in bulk from distributors we found online.  We had to test the quality of several before we found ones we like.  The prices of things like pizza boxes varied greatly so shop around before you commit.  We often would take the phone numbers of the distributors off the labels of the products in the supermarket chains.  We’d stop the trucks delivering supplies and drinks to stores in the street.  The little things like jalapenos can only be found in the top-end supermarkets like Supermaxi, so we buy those there.

Chicken and fresh produce vegetables are much cheaper in Ecuador than in Canada.

Some things are more expensive in Ecuador, like pepperoni which is $5/kg in Canada while $13/kg in Ecuador.  Some things are cheaper like cheese which is $22/kg in Canada while $7/kg in Ecuador.

What are some interesting things you’ve learned about selling food to Ecuadorians?

Ecuadorians don’t drink much coffee compared to North Americans.  They love hot sauce.  And they’re surprised by all the different pasta options we offer like tomato, pesto and alfredo sauces, but in a pizza shop they usually ignore our fringe offerings and go right for the pizza.

How did you find your staff?  

Well, my friend and I started the business, we are the cooks for now, and my friends brother moved to Ecuador as well to help out.  We hired one waitress to attend the clients and answer the phones (since we dont speak much Spanish).  We pay her $400 a month plus tips which is a bit over the minimum wage in Ecuador for a full-time 40 hour a week employee.  We found her quickly by placing a classfied ad in the Quito Sunday newspaper.

What are your profit margins like for the food you sell?  

Well, if you don’t count the fixed costs like rent and so forth , just taking into the account what we pay for the food itself and what we sell it for the profit is about 70%.  That number can get higher if we sell more and are able to buy in bigger bulk.

How much do you sell on a good day?

Our goal based on our price level, roughly $8 a meal, and restaurant capacity is to sell $40 per table for a total of $1000 of sales per day.  That is a good day for us.

Any other tips for a new restaurant owner wannabe in Ecuador?  

Sure, the cost of living and rent in Ecuador is cheap compared to a place like Canada so take your time to find a good location, it could take several months of searching, don’t kid yourself with an average location, you win before you begin.

How can we learn more about your restaurant or give it a shot ourselves?

Check our our Facebook page MegaPizza Cumbaya to see pics of our food, we are right on the corner of Orellana y Chimborazo in Cumbaya or call 02-603-9983 for more on how to arrive, obviously, we speak English, open 7 days a week.  And on Monday nights we have EXPAT NIGHT from 6-10PM where if you show a foreign passport you get a free beer or beverage of your choice with any meal purchase.

And to learn how to find the unpublished property deals no one else knows about, subscribe to my weekly Ecuador Insiders Newsletter below, you can unsubscribe at any time:

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