Bloomberg Anywhere Login


Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world.


Financial Products

Enterprise Products


Customer Support

  • Americas

    +1 212 318 2000

  • Europe, Middle East, & Africa

    +44 20 7330 7500

  • Asia Pacific

    +65 6212 1000


Industry Products

Media Services

Follow Us

Brazilian Barbecue Cheaper in U.S. Shows Strong Real Takes Toll

Meat lovers in Washington craving traditional Brazilian barbecue will pay less for it than fellow carnivores in Brasilia. 
Photographer: Foodstock
Meat lovers in Washington craving traditional Brazilian barbecue will pay less for it than fellow carnivores in Brasilia. Photographer: Foodstock

May 31 (Bloomberg) -- Meat lovers in Washington craving traditional Brazilian barbecue will pay less for it than fellow carnivores in Brasilia. The cheaper check shows that Latin America’s biggest economy is losing what its leaders have called a “currency war.”

An all-you-can-eat dinner at Brazilian steakhouse Fogo de Chao goes for $3.25 more at the chain’s Brasilia outpost than at its Pennsylvania Avenue branch. Before the real’s 45 percent rally against the dollar since the start of 2009, the same meal at today’s prices would have cost $14.70 less in Brasilia.

Brazil’s fastest economic growth in two decades and quickening inflation have made Sao Paulo, Rio de Janeiro and Brasilia more expensive than any city in the U.S., according to a survey by ECA International, a London-based human resource company. While Brazilians have reveled in the purchasing power of what Goldman Sachs Group Inc. calls the world’s most overvalued currency, it has made life tougher for local companies competing with imports.

“Today, costs are higher in Brazil than in the U.S. to open a new business,” said Arri Coser, the 49-year-old former waiter who co-founded Fogo de Chao with his older brother Jair. “A few years ago, my cost of meat per meal in Brazil was one-third what it was in the U.S. Now it’s the same.”

Trade Deficit

Among the Brazilian industries most affected by the currency gains are shoes, textiles and furniture. The strong real will cause a $100 billion deficit in the trade of manufactured goods this year, up from $71 billion in 2010, Paulo Skaf, head of the Sao Paulo Industrial Federation, said May 23.

Under the motto “The Gaucho Way of Preparing Meat,” the Coser brothers, who own a majority stake in the chain, oversaw the opening of 16 Fogo de Chao affiliates across the U.S. since their debut in Dallas 14 years ago. In Brazil, the world’s biggest beef exporter, they’ve opened six eateries since 1979.

Fogo de Chao means ”fire on the ground,” and refers to the traditional way of cooking meat on a spit over a flame in the southern region of Brazil. The method pays homage to the region’s gauchos, cowboys who used to roam vast plains in Argentina and Brazil.

The restaurant chain’s revenue rose 12 percent last year to $170 million, Coser said. In 2006, Sao Paulo-based private equity firm GP Investimentos spent $64 million to buy a 40 percent stake in the company, according to the fund’s website. It now owns 35 percent of the business.

Better Opportunity

With a per capita income four times higher than Brazil’s, the U.S. still offers a better opportunity for expansion, Coser said in a phone interview from Sao Paulo. He is preparing to open two more restaurants in the U.S., in Las Vegas and Orlando, and just one in Brazil, in Rio.

While Coser declined to detail his labor costs, U.S. workers typically earn more than Brazilians do. The mean monthly U.S. wage in May was $3,701, according to Labor Department figures, while the average Brazil wage was the equivalent of $955, according to the national statistics agency.

Brazilians’ purchasing power is growing as poverty declines. During President Luiz Inacio Lula da Silva’s eight years in office, from 2003 to 2010, 36 million Brazilians rose into the middle class.

Big Mac Index

Still, near record-low unemployment is fueling demand for everything from dining out to bikini waxing. That in turn is pressuring inflation, as service prices rose 8.57 percent in the year through April, the fastest pace in at least 15 years, according to the central bank.

McDonald’s Corp.’s flagship sandwich cost last year $5.26 in Brazil compared with $3.71 in the U.S., according to data compiled by Bloomberg from The Economist’s Big Mac index. The burger in Brazil is at its priciest since at least 1998 and is the fourth most expensive among 31 major economies tracked by the London-based magazine, after Norway ($7.20), Switzerland ($6.78), and Sweden ($6.56).

The cost of living in Rio, Sao Paulo and Brasilia surpassed New York in 2010, according to ECA International. Rio’s ranking among the world’s most expensive cities rose to 19 last year from 51 in 2009, and Sao Paulo rose to 26 from 71. New York climbed to 39 from 60, while Brasilia leaped to 30 from 70. Brazil’s gross domestic product grew 7.5 percent last year, and the government of President Dilma Rousseff, who took office Jan. 1, forecasts growth of 4.5 percent in 2011. Brazil’s benchmark stock index is down 7.7 percent in 2011, compared with a 5.8 percent gain for the Standard & Poor’s 500-stock index.

Manufacturers Suffer

Partly because service providers don’t face competition from imports, prices in that sector are rising faster than broader inflation, which reached 6.51 percent in mid-May.

Manufacturers, on the other hand, have suffered. Since 2003, the real has rallied 122 percent against the U.S. dollar and 74 percent against the Chinese yuan, the biggest gain amid 25 developing nations tracked by Bloomberg.

Cheap imports led shoemaker Vulcabras Azaleia SA to close earlier this month its plant in Parobe, in the southern state of Rio Grande do Sul, according to a May 13 company filing to the securities regulator. The company laid off 800 of its 42,000 employees, cutting output by 3 percent, or 8,000 pairs a day.

Brazil is stepping up measures to protect industry from the strong real. Finance Minister Guido Mantega tripled a tax on capital inflows in October. Under Rousseff, he’s also increased taxes on foreign loans three times and the central bank stepped up intervention in the currency market to contain the real’s gains.

Mantega in September said that countries were competitively devaluing their exchange rates in a global currency war, and since then, other Brazilian leaders including Lula and Rousseff have adopted the term.

Money Pours In

The pressure on the real is being fueled by foreign currency inflows that have reached $45.9 billion so far this year, nearly double the $24.4 billion for all of 2010. Brazil’s real interest rate, the highest in the Group of 20 nations, has helped attract investment.

Mantega’s failure to stem gains in the real is handing investors in Brazilian bonds the best returns in Latin America this year. Real-denominated notes returned 11.6 percent in dollar terms this year, compared with 8.3 percent for local bonds from the region, according to the JPMorgan Chase & Co. index data.

Yields on Brazilian fixed-rate bonds due in 2013 surged 92 basis points, or 0.92 percentage point, in the past nine months as inflation expectations have risen.

Bigger Challenge

Learning to live with a stronger real is a bigger challenge for Rousseff than controlling inflation, Gray Newman, chief Latin America economist at Morgan Stanley in New York, said in a phone interview.

“Currency war is not just a clever slogan,” Newman said. “The strong real has been incredibly positive for Brazil’s demand; it is at a very destructive level for Brazilian production.”

For the owner of Fogo de Chao, it’s a blessing.

“The strong real helps my business,” says Coser. “I import wine and olive oil. I buy beef from Uruguay and Argentina, and lamb from Chile and New Zealand.”

To contact the reporter on this story: Andre Soliani in Brasilia at;

To contact the editor responsible for this story: Joshua Goodman at

Please upgrade your Browser

Your browser is out-of-date. Please download one of these excellent browsers:

Chrome, Firefox, Safari, Opera or Internet Explorer.