Porcão Churrascaria Faces Legal Difficulties

One of Brazil's most popular churrascarias is facing financial trouble and could lose the brand name.

By Benjamin Parkin, Contributing Reporter

RIO DE JANEIRO, BRAZIL – Churrasco (Brazilian barbeque) lovers will be alarmed to hear that Churrascaria Porcão, one of Rio’s most famous barbeque restaurant names, is going through tough times. Brasil Foodservices Group (BFG), controlling shareholders of the restaurant, are facing 38 lawsuits and being threatened with confiscation of the brand Porcão after failing to repay debts.

Porcão Churrascaria location in Ipanema, Rio de Janeiro, Brazil News

The famous Porcão Churrascaria location in Ipanema, internet recreation.

The brand could be taken away as a Rio court has ruled that it be offered as security for a reported debt of R$5 million owed to Prince Comércio e Serviços Ltd. over unpaid rent for a property in Barra da Tijuca.

This is just the tip of the iceberg though, in the first nine months of 2013, BFG posted R$137.2 million of loses and are faced with more than thirty separate lawsuits, according to O Globo.

BFG expect to lose at least half of the 38 cases, including that with Prince. However, they are appealing against the use of the Porcão brand as security, arguing that the brand is far more valuable than the debt in question.

Still, BFG contests the case against Prince on the grounds that, upon inspecting the property they had rented from Prince in order to set up a location they found it to be in an inadequate state. “BFG decided, therefore, to reject the location, using a contractual clause which included the automatic annulment of the contract in the case that rent was not paid,” said the firm.

“In this way, Porcão’s lawyers argue that there should not be a process of reclaiming debt, because there cannot be debts in an annulled contract. The group did not do any works in the property and requested an expert from the Justice Department to inspect its condition. The request was granted, but the inspection has still not happened.”

Churrascarias, Rio de Janeiro, Brazil News

Churrascarias are a popular type of Brazilian barbeque restaurant, internet recreation.

More alarming is that BFG also owes debts of R$32 million for violating employment contracts, including unpaid extra hours, holidays and not passing on tips. One set of 112 cases will require R$17.4 million to repay; another of 316 has accumulated R$15.4 million of debt. BFG says that it expects to repay these amounts by mid-2016.

Last week, employees unhappy with late payment of salaries reportedly began preparing strike action, but the management responded and quickly met their demands. BFG confirmed the late payments: “The company went through a process of restructuring which, at a certain point, resulted in a delay in certain payments. This has already been dealt with and these commitments have been taken care of.”

Last year, a strike by Porcão employees resulted in at least sixteen employees being fired. Antônio Ângelo, president of Rio de Janeiro’s waiters’ union, also reported that even the quality of ingredients had gone down at Porcão restaurants, a sign of the iconic restaurant brand struggling.

Many restaurants in Rio have been squeezed with a steep increase in costs, which has also been reflected in the prices of their products. The recent $urreal campaign has highlighted the absurdity of many prices, and argues that places with abusive prices should be boycotted.

Perhaps the world’s most famous churrascaria (Brazilian steakhouse) was born in 1975 on the Avenida Brasil in Centro, Rio de Janeiro. Porcão (Big Pig), has undergone significant growth, establishing five restaurants in the Rio area, one in Brasilia and another in Belo Horizonte.

Through franchising, the brand was exported to many countries abroad, including the United States. Later on, however, the franchise was dropped due to difficulties in long-distance business management.

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