Caracas, Mar 5 (EFE).- Germán Peña’s fast food stall is one of the thousands of small businesses operating in Venezuela’s informal economy.
Three months ago he landed on a new business model to drum up customers — hawking hot dogs at $1 each. On a good day, Peña might sell 100, taking in $100, some $30 of which is profit.
These kinds of unlicensed businesses have seen a boom in Venezuela thanks to the volatile cocktail of socio-economic crises, the Covid-19 pandemic and a lack of credit thanks to a hyper-inflated local currency.
According to the National Council of Commerce and Services, businesses are “stampeding” toward the informal economy.
It added that between 20% and 30% of companies that said they had closed their doors because of the pandemic were in fact continuing to operate but without paying tax.
Felipe Capozzolo, head of the council, told Efe: “They are in subsistence mode, we could say, taking action to confront the daily problems.”
Selling products at $1 permits a level of subsistence in Venezuela, where the minimum monthly salary is just 64 cents.
It’s common in Caracas to see cigarettes, slices of cake, empanadas, socks and accessories on sale at that price, which also seems to be the minimum selling point in the formal economy.
Some in the informal economy consider the $1 selling point non-profitable.
“With the hamburgers, we sell ($6-7), it is possible (to make a profit) but at a dollar, no way,” Germán tells Efe.