How to make Peru’s gastronomic boom a sustainable business

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Prices of ají amarillo boosted 122% between 2009 and 2010, Acurio’s restaurants consume 40 tons a year. Unlike onions or limes, this Peruvian pepper has "no substitute in the world," say a specialist. (Photo: Internet)

There are reasons to lick our fingers. In 2010, 20 restaurants per day were opened in Peru, making a total of 7,300 according to the Peruvian Society of Gastronomy (Apega). In the last three years, the number of Peruvian restaurants in the U.S. has doubled to 400. The gastronomic franchises sailed to the Atlantic: Now you can eat a ceviche from Segundo Muelle in the Canary Islands. Sodexo has started to serve 23 utmost Peruvian dishes to 27 million diners in seven countries around the world.

We have repeated so much the chorus of the “gastronomic boom” that we really think the chains are oiled, that we are doing and investing all we can to assure that the fever is sustainable, and not just one more anecdote. But that is not the reality.

Where are the big players?

Despite the big thrust of restaurant chains that open the world’s mouth to our food, and of businesses that pack and export, if we stop looking exclusively at the dining room and go to the kitchen, we will see that the entrepreneur’s hunger to bet and risk for this boom is not quite yet there.

“Gastón Acurio has triggered the take-off of Peruvian gastronomy, but we do not have the support of an industry that enables us to maintain the speed we need, which could cause bottle necks in the future,” says Rafael Montes de Oca, projects director of Alert de Perú, the firm behind the successful China Wok chain, with 74 restaurants in seven countries. Now they have launched Montao, Peruvian food in a fast food format.

But not everything is bad news. Business gaps always create a menu of opportunities not only for those willing to sit down and eat a lomo saltado, but also for those that want to invest in the recipe.

For Montes de Oca, the main problem is the absence of big players to supply vegetables that can guarantee a good tracking system, cold chain – constant temperature for its conservation – and some price predictability, like with chickens from Avinka and San Fernando. “But we need more; we have to improve the kitchen equipment industry with technology that rivals the global offer,” he says.

The absence of cold chains makes the operating capacity of restaurants and franchises really difficult but, additionally, hinders farmers – who harvest all those marvels from our territory – to benefit from that boom.

"We all should benefit"

José Carpena, operations manager of Gastón Acurio’s holding, La Macha, regrets that there are no stock centers in the coves or distribution channels that can help artisan fishers, who still live in poverty despite the high demand of sea products, to serve restaurants the fish and seafood they catch all along the Peruvian coastline.

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La Mar in San Francisco, one of the 27 restaurants, local and abroad, that conform Acurio’s holding, La Macha. (Photo: La Mar)

La Macha acquires in a year almost S/. 2 million (a bit more than $ 700 thousand) worth of fish and seafood; S/. 2.2 million ($ 809 thousand) of fruits and vegetables, and S/. 2.3 million ($ 773 thousand) of groceries to supply T’anta, La Mar, Panchita, Astrid y Gastón, and now Madame Tusan in Lima. More than S/. 6 million that don’t end in the hands of those he would really like.  

“We want the producer to benefit from all of this,” says Irzio Pinasco, general manager of La Macha. “We don’t have intermediaries with a fair trade philosophy or a non-government organization that could provide them with technical assistance to assure standardization, sustainability, and the tracking of products. In other words, I want to be sure I am paying more for a lime produced in Chulucanas [in Piura].”

“I can find a farmer that grows perfect tomatoes, and then I’ll hire him, but a later time he will not be able to grow them anymore or the quality will go down. The state should teach the farmer how to integrate to the market. We can’t do it all,” Pinasco says.

A spicy problem

There is certainly a real problem that can hit the food industry’s future very soon. The production of Peruvian peppers – ají Amarillo – has dropped 13.3 percent between 2009 and 2010. As a result, its annual average price has boosted 122 percent in that same period of time. This has complicated the operations of Frontera Sur, for example, the company that processes industrially the secret tastes of Gastón Acurio’s dishes and supplies all 27 restaurants of the holding, in Peru and abroad, with vacuum-packed seasonings.

“Last year the ají reached a price of S/. 14 per kilo ($ 5) when the normal price is S/. 2.50 ($ 0.9), forcing us to lose money with our anticipated orders. The problem is that, unlike onions or limes, the ají amarillo has no substitute in the world,” regrets Mario Barrantes, general manager of Frontera Sur.

The problem is that the ají amarillo is grown without any technical support, and depends instead of small farming in Lima and Cañete (south of Lima) with extremely low production of around five tons per hectare.

“The agro-industry entrepreneurs are not interested, so we are searching for a terrain of about 200 to 400 hectares so we can assure our ají supply. Now we have a turnover of $ 800 thousand and consume 40 tons, but in a few years the demand could grow up to 2,000 a year,” says Barrantes.

The domino effect

The restaurant boom in Lima, at all levels and categories, has bounced back positively in other businesses such as metallic carpentry. Refrinox general manager, Marco Rojas, has doubled his personnel between 2009 and 2010 due to the high demand of furniture, kitchens, and stainless steel refrigerated cabinets fro kitchens.

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Peru’s gastronomy industry has to be standarized and sustainable. That is the only way a Peruvian ceviche can be done succesfully in Moscow or Beijing. (Photo: Jorge Riveros-Cayo)

Refrinox obtained S/. 3.6 million (around $ 1.3 million) in sales during 2010, more than twice than in 2009, and four times as much as in 2008, charging around $ 80 thousand to equip a complete kitchen. Refrinox supplies Norky’s chicken fast food chain, but also built the sophisticated kitchen for Rafael Osterling’s newest restaurant, El Mercado. His best client: “Norky’s opened more than 14 restaurants in 2010. When they request five pieces of furniture, I make eight because I can save costs and I know they will buy the rest, sooner or later,” says Rojas.

But Rojas is skeptical about the boom. “I already started to supply clinics. That is where the money is. In two more years, restaurants will not grow at the same rate,” he says.

Juan Orrego, the proprietor of Metrópolis architect studio thinks there is no entrepreneurship vision when t comes to opening gourmet restaurants in Lima. “The problem is that there are too many chefs that don’t know how to do business and a lot of investors that want to join the boom but don’t know anything about restaurants. This is the beginning, the time of trial and error,” he explains.

Peruvian gastronomy has a powerful dynamic that is beginning to grow, but there has to be a visionary entrepreneurial thrust to make it happen, because there is a lot yet to be eaten on that plate.

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