Retiree Discounts And The Effect on Panama
May 20th, 2008 by Don Ray
Another blog, in a recent article, has presented the idea that the retiree discounts are bad for Panama. Considering that the author’s real estate development has, in the past, promoted the fact that Panama had these discounts (to entice buyers) and the development website still has links to articles that tout the discounts, this seems a little hypocritical.
The article seems to blame foreigners (non-Panamanians) for the cost escalation that is being seen through out Panama. How foolish of a foreigner to believe that the things that he reads in various publications were really available to be used. Maybe all such articles should have a footnote saying that while Panama has retiree benefits, they should not be used.
One of the examples used was that in Boquete, “all restaurants are forced to raise their prices significantly to survive”. I agree that all business models must take all expenses into consideration, if they plan on making a profit. However, the amount of expense, that the retiree discount adds to the portion of the meal that it applies to, is a small percentage of a restaurant’s expenses.
My suspicion is that a much greater expense is the rent that the restaurant operator is having to pay. With the influx of more foreigners to Boquete, for some reason the land owners seem to think they can increase their rent. This contributes to rising prices to a greater extent than the discount on a meal.
It appears to me that many businesses in the Los Establos development in Boquete have struggled. Some to the point that they have closed up shop. Is this because of retiree discounts or because of the rent basis? If we strictly consider restaurants, I bet restaurants lose more clients because of poor service or poor food than the price they charge (assuming it is within reason). Boquete is building it reputation as a tourist destination as well as a retirement site. Tourists are less concerned with the price of their meal than they are the quality of food and service. They also do not participate in any retiree discounts.
I do not believe that anyone should move to Panama because of the current retiree plan that is in place. However, I also do not think the person that chooses to use it should be criticized for doing so. Prices are going up all over the world, not just Panama. Panama is competing for tourists and investors like all other countries. To focus on a possible negative effect of retiree discounts, seems to ignore some of the more significant elements to inflation in Panama.
A developing country is faced with many conflicting issues. A country will not grow without interacting with the rest of the world. Panama is facing many of these issues. A good balance in handling these issues will allow for the country as a whole to benefit. Many jobs have been created in Panama because of foreigners coming to Panama to live. Many restaurants have employees that receive more money in tips than they receive in salary. Many foreigners hire maids and gardeners. Many laborers are employed in constructing the new houses that are being built.
While these new jobs are a good thing, there are downsides. More houses and developments require more infrastructure to support them. There is an ever increasing need for electricity. Panama is facing a real crisis because there is not currently sufficient electricity to satisfy all the building that is going on.
Panama may get a lot of rain, but there isn’t sufficient water in Panama to handle all residential areas now, ignoring the current development that is going on. Many areas are also dealing with a water quality problem.
Wealthy developers can come into parts of Chiriquí and offer the land holders more money for their land than they will ever get from the crops that they grow in their lifetime. Quite a temptation. If they sell to the developer, then not only will the cost to live in that area go up (developers do not operate at zero profit), but also there will be less produce from that land available to Panama residents. Milk will become more expensive, cheese will become more expensive, beef and poultry etc. will become more expensive.
A well thought out plan of how to intelligently allow development needs to be implemented. Unfortunately, well meaning plans can be ignored, if hands get greased. Chiriquí is the breadbasket of Panama. Panama needs to give the farmers incentive to continue creating food and limit sales of producing farms to real estate developers.
These latter issues are of more concern to me than retiree discounts. However, let me go back to retirees and discounts. I don’t use or ask for discounts all the time. If I go to a TGIF or McDonald’s or Pizza Hut Or KFC, I take my discount. If I eat at a “comida del dia” restaurant I would never ask for a discount. In an expensive restaurant in Boquete that caters to gringos, I will ask, assuming I spent a lot of money there. You have to remember that the discount doesn’t go against the entire bill. Only the retiree’s meal. The dessert and bar bill aren’t covered. Only people that are entitled get a discount on that which is covered. Many gringos take family and friends, that are not entitled to a discount, with them.
I have also seen retirees that embarrassed me, when they asked for discounts. I have seen gringos get into arguments about the bill not having a discount or the amount of the discount. If a restaurant doesn’t want to comply with the law, then the person making a scene is more offensive to me than the lack of the discount. Don’t go back, if it is that big of a deal.
Am I going to take advantage of the discount on hotels or pharmacy or travel? Sure. If I am entitled to it, then I would be foolish not to take advantage of it. Am I going to leave Panama if the discount is taken away? Don’t plan on it. I didn’t move here because of the propaganda that was written about Panama. I advise all people to come and stay in both the rainy and dry season before they decide to move here. I guarantee that a person will like it or not like it independent of any retiree discount.
If you come to Panama then treat all Panamanians with respect. Remember you are a guest in their country. I have found that if I treat them well, they treat me well. Remember that you are also a representative of what ever country you come from. If you want Panamanians to think that all foreigners from your country are jerks, then act like a jerk. How you treat the people of Panama will be much more important to them, than if you do or do not ask for a discount.
Don Ray,
Great piece. Couldn’t agree with you more. I have been in and out of Panama for the past 45 years and am married to a Panamanian. It is a wonderful country, but has its problems like all countries.
To state that the retiree discount is the cause of the financial problems for restaurants or other businesses is ridiculous. Enjoy your web site.
Hi Roy. Thanks for taking the time to leave a comment.
Today is one of the Social Security pay days. Romero’s gives a 5% discount on most food items to retirees. I asked for the discount and turned around and gave it as a tip to the bag boy who carried my bags outside. I wanted to reward him for working. I remember when I was his age how hard money was to make.
Like you I do not ask for the discount at a “comida del dia” restaurant.
Several points occur to me, Don. I think the original author is taking a very simplistic view.
1. Boquete is a very small place and the situation there is unique. Discounts are only a minor factor in the equation.
2. Rising food prices are a worldwide phenomenon.
3. Real estate prices have soared due to speculation and I believe the author of the original item was a pioneer in that particular field.
Peter
John and Peter. Thanks for adding a comment.
Though I haven’t been to Panama yet I’m strongly drawn to retire there for more reasons than a diner discount. I have friends who are already there. But I’ve lived for several years overseas (France, Spain and Guatemala) and have run into the crashing bores who come visiting and lay waste to their host’s country, customs and culture.
I can’t tell you how many times I have gone up to such idiots and told them “It’s people like YOU that make it hard on people like ME, and I’m sure you’re just as much of a butt wipe at home as you are here.”
Though I don’t plan on doing anything more than visiting your part of Panama (I’m a sailor and Bocas is where I aim to be) I think your blog is one of the best around.
Hi Richard. Thanks for dropping in and taking the time to leave a comment.
Nicely written! I, too, had read that blog and thought.. well, I’ll supress what I thought..
To my astonishment, I’ve suddenly got old and need to take several meds every day and I can safely say that the medical discount is well appreciated. As are the air travel and hotel discounts.
We rarely bother with the restaurant discount except at truly upscale places because we are feeling increasing uncomfortable about asking for it. Our rule of thumb has become the Rule of 10; if the main course is $10 or more, then we’ll ask, otherwise we let it slide.
I agree about the Boquete restaurants sucumbing more to poor service and medicore food that the raging hordes of expats demanding discounts. We’ll be back in Boquete next week and I fully expect to eat a number of poorly prepared, poorly served and definitely overpriced meals while I’m there.
Why? Because in the three years we’ve been coming to Boquete we’ve never failed to find that most of the restaurants are determined to drive themselves out of business. And most eventually succeed at doing so.
One of the best meals I had in Boquete was in what had been a woman’s living room that she had made over into a tiny restaurant. Trout with rice and some sort of veggie I no longer remember. Simple, prepared well, served with a smile.. I’ll be going back to see her again this trip.
That’s why we enjoy your right-ups about the David restaurants so much. It’s nice to have some idea of what to expect and where to give a try.
Hi Mike. Thanks for taking the time to leave a comment. The rule of 10 sounds like a good idea to me, unless I am at McDonald’s.
Jeez, I’m too busy to read for a couple of days, and look what I miss!
Great write-up, Don, and right on as well. I am also in emphatic agreement with you and Mike Horrell about Boquete restaurants. i would simply extend that to Boquete in general myself, with a few (but very few) exceptions.
And to emphasize that we’re guests in this country: for those who have the pensionado visa, take a really good look at what type of visa you REALLY have. I know what mine says, as I stare at it: “turista pensionado”. Yep, a permanent tourist, not even permanent residency.
We’ve both written about the witless folks who come here who haven’t put as much thought into the move as they would in buying a TV set. They’re hopeless. I agree with whoever said that the Ugly Americans would be TP back in the US–just more restrained because Americans are a litigious sort, and they might get slapped with a lawsuit. We encountered a number in Boquete and one in David, making himself heard loudly at Ray, complaining about the service. there was good reason why there was no one at that counter at that moment, but I assume he couldn’t read the small sign in Spanish that explained. Boquete has been so bad in that regard, that we avoid it; not only are there Ugly Americans, but there are very large numbers of the Witless and Clueless. We sneak in about once a month, renew our supply of essential coffee, and sneak out again before anyone stops us to give us unasked for advice or makes some comment that shows us they have no idea that they’re actually in a foreign country.
I hope these people figure it out soon that they don’t belong here and get out. I know two in our area who are leaving here to be unhappy in Argentina. Nothing can be done for these people, and it’s a waste of time and effort to try. Figure out how many days, statistically speaking, that you have left in life and then ask yourself how many of those you want to waste dealing with people like that.
Of course I know that all boquetenos are not like that, probably not even the majority. It’s just their decibel level and behavior make it seem that way. Why, some of my best friends used to be boquetenos–of course, they’ve since moved closer to Panama City because they couldn’t stand it any more.
Oh well–our gates are locked.
Hi Joyce. Thanks for adding a comment.
Everytime I hear this kind of thread, (meaning the author of that blog re: “retirement discounts to end”, not yours, Don Ray), a cartoon picture comes to mind. Unfortunately, I can’t draw a cartoon. But the image is of a big fat old crimson faced gringo baby in diapers having a screaming tantrum, with the balloon of words: “I WANT MY JUBILADO!” (jubilada, pronounced of course as an English word.)
I don’t know. Just can’t seem to get that image out of my mind. Anybody good at drawing??
I think everyone’s already getting great deals on so many things. Discount on long bus rides is great, and other such items that are more expensive. Makes me feel like I’m cheating, or having one of those neat dreams where I’m in a store and everything’s practically for free. Don’t feel I need to get a deal on every little nitty thing. And I’m not even in the ballpark of the McMansion crowd in Boquete.
I agree with the “rule of 10″.
Also, re: Boquete restaurants, with all the rich gringos, ya’d think everybody’d be making more money at the restaurants, because of increased clientele…all be it perhaps gringos screaming “I want my jubilado!”
Maybe it’s time for a visit from famous British (or actually think he’s Scottish) Chef Gordon Ramsey, of “Ramsey’s Kitchen Nightmares” TV fame. Get him to whip the restaurant owners into shape. We could all suggest a particular restaurant in Boquete for him to “help”. We could all watch it on TV! Or on streaming video.
The restaurant business is brutal everywhere. They open. They close. They flunk out. They mess up. Or sometimes they do it all really well. Come on Gordon. Make a visit to Boquete! I know you can fix this.
OK. Guess I’ve had enough fun with this one.
Thanks. Charlotte
Hi Charlotte. Thanks for taking the time to share your comment with us.
My opinion…
I am waiting Torrijos to refound 25% of discounts … some year, or century.
i dont charge tips, but i can add 10% like casino’s.
if i add 10% normally in all bills then i will have less people, but if i apply 25% discount i will have same result. They open, they close.
be or not to be….
David “Shakespeare” Renegado
Well here is what I think about a business ’s responsibility related to discounts. If a law says that discounts are available to eligible people, then I believe that, if asked, the business is required to give the discount. If the business doesn’t give the discount, it is breaking the law. Doesn’t sound like a good thing to me.
The discount doesn’t apply to all items on the menu and it it isn’t available to all people. With reasonable statistics, a restaurant can determine , within a reasonable amount of time, what percentage of eligible people it has that come into the restaurant.
I know many people go to restaurants and only eat dessert or have beers and talk. Neither of these two cases get discounts. An active bar will cover the cost of most discounts in many restaurants.
Many families go to restaurants and only one member in the party is eligible for the discount. The discount does not apply to the entire bill, only to that one person’s items and then only to certain items.
So the net effect of net effect to prices of a restaurant can only be determined after the restaurant has determined the traffic it receives and what percentage of that traffic is eligible for discounts. It also has to be smart enough to give the discount on the items that receive it and not across the board.
If the law says that a discount will be given in certain situations and a business decides not to give it, the conflicts will arise and eventually the loser will be the business.
I personally think that a business adding tips to a bill is dumb. Most tourists from the US will tip more than the 10% that is allowed to be added so it will then lose the difference. I believe a tip is to provide an indication to the provider as to how the service was. Good service deserves a good tip. In Panama that would be 10%. Bad service does not deserve a 10% tip. Less than 10% should tell the provider that its service is substandard.
Bad service and bad food will stop clients from returning much faster than adjusting eligible food items to cover the legal discount.
I do believe it is unfair of the Panama government to require the discount to be given without giving the business relief on the taxes it pays by the same amount. This must mean that the government assumes the business will cook the books and cheat.
However, as long as the law is the law, then I think there is risk for any business that breaks it. One way or another it will affect business.
Sorry about yesterday’s “flip” comments. Excuse: recovering from a “gut bug”, so was feeling, well, flip. Reality: Didn’t take the time to thoroughly read your post.
Have today, and will give it at least one more read-through. Excellent and thorough.
Re: restaurants and tipping. Both Don & I have been in the business. We tend to “overtip”(unless of course, service is wretched). We enjoy doing this as we know how hard service professionals work, and how difficult in general the bar/restaurant business is.
OK. No need to go. Again, excellent thorough information.
Take care. Thanks again. Charlotte
Thanks for the return visit.