Image:
Felipe Leon  /  NBC News
Rolando Hernandez stands in the middle of his restaurant, Las Margaritas, last night.
By Producer
NBC News
updated 5/5/2011 11:04:52 AM ET 2011-05-05T15:04:52

When Cuba’s Communist government recently eased restrictions on “mom and pop” businesses, Rolando Hernandez decided to pursue his lifelong dream of starting a small restaurant.

Regrettably, he never learned the business axiom “location is everything.”
 
Hernandez sunk his life savings into the business, even selling some of his personal belongings such as his computer, TV and his living room furniture to raise the start-up capital. In February, the 46-year-old waiter quit his job and opened Las Margaritas, a family-style restaurant in Habana del Este, a working-class neighborhood in Havana where Hernandez has lived most of his life.

The restaurant is one of the few operating in Habana del Este, so Hernandez thought that alone would work in his favor.
 
“I imagined business so brisk that no one here would have the time to sit down,” he said.  
 
Unfortunately, sitting down is basically what Hernandez’s employees find themselves doing most nights. Business perks up a bit on Saturday and Sunday.

The restaurant boasts an intimate dining room, pleasant and tastefully decorated, with a large, clean kitchen full of experienced staff. Like Hernandez, everyone else working at Las Margaritas recently quit their jobs working in state-run hotels to try their luck in Cuba’s private sector. The few customers who have been to the restaurant report that the food is good and the portions are generous.

Hard lessons in capitalism
So what, Hernandez asks, is he doing wrong?
 
When he has a little more money, he plans to put a sign up outside the building. At this point only a psychic or someone with a great sense of smell could venture to guess there was a restaurant behind his wooden doors.

As far as advertising goes, there isn’t any. Even if he had the money, there are no independent newspapers or radio stations in Cuba where a restaurant like Las Margaritas could place an ad. So, Hernandez relies mostly on word of mouth.

Image:
Felipe Leon  /  NBC News
It might be hard to tell, but that is the exterior of Rolando Hernandez's restaurant, Las Margaritas. With no outside signage and in the middle of a working-class neighborhood, the restaurant is struggling.
The restaurant has also only been open for two months – admittedly a very short period of time for a startup to see a profit. Still, Hernandez said he expected to recover his initial investment by now.
 
Possibly the biggest challenge to Las Margaritas’ success is its location. Habana del Este lies east of Havana’s harbor, miles from the city’s tourist zones, and Las Margaritas is squeezed in between square Soviet-style apartment buildings, constructed after Fidel Castro came to power in 1959.

No money to go out  
The neighborhood is home to working people like Lidia Nunez, who scrimps by on a nurse’s salary. For most, it takes a special occasion for a family to spend their hard-earned wages eating out.
 
Like a daughter turning 14. Nunez said she saved for two months to have the money to splurge on a modestly priced birthday meal.
 
That takes a certain kind of sacrifice, but you hear stories like that all the time in Cuba.
 
For the last 20 years, the loudest complaint many Cubans have had is the inadequacy of their paychecks. On the books, people are earning more than ever before, but in reality, the Cuban peso buys less than it did two decades ago.

After the Cuba economy went into a free fall, from 1989 to 1993, the level of what’s called “real” wages collapsed – those are wages adjusted to inflation rates. Research by Cuban economist Pavel Vida found that while real wage levels began to steadily increase after 1994, people continued to seriously struggle to make ends meet.

Today’s real incomes, Pavel estimates, hover just around a quarter of their 1980s levels – making  it all the more astonishing that a single mom like Nunez would ever be able to save enough to treat her daughter to a birthday meal.

Nunez calls that resourcefulness.
 
The same kind of resourcefulness that sent Hernandez back to his business plan when business was too slow for his liking.

Now, in addition to offering formal dining, Las Margaritas has a scaled down take-out menu more in line with what his customers may be able to afford.

“Las Margaritas could turn out to be my dream or maybe my nightmare,” Hernandez says with a shrugs. “Only time will tell.”

© 2013 NBCNews.com  Reprints

Photos: The new Cuba

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  1. People walk on a street adorned with a national flag in Havana on July 29, 2010, three days after the 57th anniversary of the start of the Cuban revolution. (Desmond Boylan / Reuters) Back to slideshow navigation
  2. Children in Havana listen to their school director in September on the first day of the 2010-11 school year. Free education for all is one of the pillars of the socialist society bulit since Fidel Castro's 1959 revolution. (Desmond Boylan / Reuters) Back to slideshow navigation
  3. A private coffee shop in Havana in January. In 2010, Cuba's private sector for the first time spent more on electricity consumption than state enterprises. This has been attributed to the increase in sales of electric appliances. (Alejandro Ernesto / EPA) Back to slideshow navigation
  4. Chef Jose Salgado works at the Partenon, a private restaurant owned by Javier Acosta in Havana, in January. After Cuban authorities announced in September 2010 that they were opening the island's closed Marxist economy to a limited amount of private enterprise, tens of thousands like Acosta are chasing their entrepreneurial dreams. (Javier Galeano / AP) Back to slideshow navigation
  5. Honor guards march in front of the hearse with the ashes of the late revolutionary guerrilla Pastorita Nunez during a homage ceremony in Havana in January. Nunez, who died in December, fought with Fidel Castro during the Cuban revolution. (Desmond Boylan / Reuters) Back to slideshow navigation
  6. A city employee sweeps a street in Old Havana in February. The government has said it will lay off 500,000 workers, yet more than five months after the announcement, layoffs have been delayed, leaving workers in an anxious limbo. (Javier Galeano / AP) Back to slideshow navigation
  7. Children prepare to perform an Afro-Cuban dance during an AIDS awareness event in Havana in November. The event was aimed at promoting AIDS awareness and tolerance of same sex relationships. (Desmond Boylan / Reuters) Back to slideshow navigation
  8. Cuban dissident Guillermo Farnias, center, is arrested in January with a group of 20 others in Santa Clara, Cuba, as they walked toward a monument to Jose Marti, a national hero who died in 1895. (Alejandro Ernesto / EPA) Back to slideshow navigation
  9. Cuban dissident Hector Maseda hugs his wife, Laura Pollan, as he arrives home in Havana in February after nearly eight years in prison. Pollan is the leader of the Ladies in White, a group of family members of imprisoned dissidents. (Enrique De La Osa / Reuters) Back to slideshow navigation
  10. Supporters of the Cuban government shout slogans against the Ladies in White, a group made up of family members of imprisoned dissidents, in Havana in March. Supporters of Cuba's communist government protested as the dissidents tried to mark the anniversary of a 2003 crackdown that sent 75 government opponents to prison. (Enrique De La Osa / Reuters) Back to slideshow navigation
  11. A worker at the Cuba Cafe factory in Havana in April. Cuba's state-run coffee company says the country has spent $9.5 million in the last five years to modernize production, but meager harvests mean it must import to cover domestic consumption. (Franklin Reyes / AP) Back to slideshow navigation
  12. Workers stand next to a water tank used to supply residents in Havana in April. The city is suffering its worst drought in more than 50 years, with more than a million residents affected, according to the government. Waterworks that waste more than 50 percent of the water pumped and a near record dry spell are being blamed for the crisis. (Enrique De La Osa / Reuters) Back to slideshow navigation
  13. Cattle walk along a road leading to the Soviet-era Juragua nuclear plant, 200 miles southeast of Havana, in January. . Cuba's nuclear power project started in 1983 and stalled in 1991 with the collapse of the Soviet Union. Then-leader Fidel Castro announced that Cuba would explore alternative energy options, dropping the nuclear solution. (Desmond Boylan / Reuters) Back to slideshow navigation
  14. A tobacco worker sorts Cuban cigars at the Partagas cigar factory in Old Havana during the 13th Habanos Festival in February. Cuban cigars are considered to be the best in the world but cannot be sold in the United States due to embargo restrictions. Money raised from the annual festival will be donated to the Cuban public health system. (Sven Creutzmann/mambo Photo / Getty Images Contributor) Back to slideshow navigation
  15. A man works cultivated land in Havana on April 5. Cuba hopes to improve its deficit in food production with urban and suburban farms that produce vegetables and fruits. In January, state banks began issuing microcredits to would-be farmers who have leased land. (Adalberto Roque / AFP - Getty Images) Back to slideshow navigation
  16. A man carries a lamb home aboard a motorcycle in the municipality of San Antonio de Los Banos in Havana in January. (Franklin Reyes / AP) Back to slideshow navigation
  17. Residents from the town Santiago de las Vegas, in the outskirts of Havana, participate on Feb. 5 in an odd tradition: the fake burial of Pachencho. The burial has been celebrated in this town for the past 27 years with rum and Caribbean music. A resident plays the part of Pachencho, while two others play the part of the widow and the priest who drinks rum. (Alejandro Ernesto / EPA) Back to slideshow navigation
  18. Martial arts instructor Maria Regla Saldivar watches her students warm up in the ruins of a destroyed industrial laundromat in Havana on Jan. 19. After Cuban authorities announced in September that they were opening the island's closed Marxist economy to a limited amount of private enterprise, tens of thousands like Saldivar are chasing their entrepreneurial ambitions. (Javier Galeano / AP) Back to slideshow navigation
  19. Alicia Alonso, left, Cuba's prima ballerina assoluta and director of the Cuban National Ballet, watches a rehearsal with dancers Anette Delgado and Dani Hernandez in Havana in March. The Cuban National Ballet, led by the 90-year-old Alonso, is taking part in a festival of Cuban arts in locations around New York this spring. The festival, called “Si Cuba!,” is an indication that cultural relations between the United States and Cuba are thawing after nearly a decade in a deep freeze. (Desmond Boylan / Reuters) Back to slideshow navigation
  20. A teenager exercises in an improvised gym in Havana in January. (Javier Galeano / AP) Back to slideshow navigation
  21. Jose Salazar works out at a training session in Havana on Jan. 24. Boxers from Argentina, Bahamas, Dominican Republic, Peru and Cuba were attending a month-long training camp in Havana. Boxing is one of the most popular sports in Cuba, with thousands of people participating. (Javier Galeano / AP) Back to slideshow navigation
  22. A man passes the former St. Francis of Assisi convent, currently a museum, in Old Havana in July. Despite the government's restrictions on religious practice, the Roman Catholic Church estimates that 70 percent of the population is Catholic. (Javier Galeano / AP) Back to slideshow navigation
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