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Dec 08 2018

Economic crisis felt in coffee houses in Turkey’s southeast

Coffee houses in Turkey's southeastern province of Diyarbakır are the most recent victims of the country's flailing economy, which has negatively impacted both owners and customers alike.

Coffee houses have long been symbols of economic turmoil in the country. Many frequenters to coffee house, which are places for socialising, card games and entertainment, have historically been unemployed. 

The Kurdish city of Diyarbakır in the country’s southeast had a strong coffee house culture, with more than 1,000 coffee houses in the city. Despite their name, coffee houses in Turkey primarily serve tea. But this culture is beginning to change and they have started to offer fast food to compete with cafes.

An economic downturn in Turkey is deepening after a slump in the value of the lira. The currency has fallen by more than a quarter against the dollar this year, prompting consumers to cut back on spending and pushing up costs for businesses as wholesale price inflation surged to almost 50 percent. 

While owners strive to keep coffee house culture alive, the deterioration in the economy has made it more difficult to buck these trends. Business has plummeted in recent months.  

"The market has become turbulent. While we were selling 400 cups of teas a day four months ago, we thank our lucky stars if we can sell 200 cups. No matter if customers come or not, we still have to pay our one employee, because he also has a household to support,” said coffee shop owner Selim Barıç. 

Barıç operates a coffee house in the bustling Ofis district of Diyarbakır’s modern New City with his business partner.

According to Barıç, one of the reasons that customers are no longer frequenting his establishment is due to the increased price of imported tea, a cost that has been passed on to the consumer. Whereas a cup of tea was one lira, many coffee houses have raised their prices to 1.5 lira. Consumer price inflation in Turkey now stands at 25.2 percent, a 15-year high.

Barıç told Ahval News that the price of imported tea has increased from 35 lira a kilo to 55 to 60 lira a kilo primarily due to the devaluation in the lira. At its lowest point in August, the lira had lost more than 40 percent of its value against the dollar, reaching a record low of 7.22 to the U.S. currency. It has since partially recovered to trade at about 5.2 per dollar.

When all is said and done at the end of the month, Barıç and his partner walk away with only 800 liras each, half the country’s minimum wage of 1,600 liras. 

“Our customers who came to our coffee house every night in the past few months are now unable to leave the house,” Barıç said.

Fırat Veznedaroğlu also noticed a sudden drop-off in customers at his Kirvem Coffee House in Diyarbakır’s Bağlar, a central district with dozens of coffee houses. Veznedaroğlu told Ahval News that profit had taken a hit due to recent increases to input costs.

“We are only barely able to get by. I have children who are studying, rent for my house, and there's been a big increase in rent for the coffee house, water, and electricity - there are six people who work here and on most days, I close not making a profit.”

At the beginning of September, Turkey’s energy regulator increased the price of electricity by 14 percent for industrial use and 9 percent for domestic use, adding to a similar increase the previous month. It has since pledged to freeze the costs till the end of the year. 

Veznedaroğlu said that while every other coffee house had raised their price of tea to 1.5 lira, his coffee house still offers tea at 1 lira. But even with subsidising the cost of tea, Veznedaroğlu has experienced problems in retaining regular customers who are reluctant to get involved in playing cards and the other games that are a feature of the coffee houses.  

“While this is the best coffee shop here, we are only doing business off two tables. Customers also hesitate to sit and play, since they don't have any money in their pockets.”

While Veznedaroğlu has the capacity to operate 15 tables, he only has enough customers for two. With rising inflation in the country, he said, retirees were unable to frequent his establishment, as their pensions have remained the unchanged. 

“When this is the case, I'm unable to put money in the pockets of my children who are in school. In short, the customers have no money, and there are no customers at the coffee houses.”

People walk on a square under hanging posters of Turkish President Recep Tayyip Erdogan and Tukish national flags in the historical Sur district in Diyarbakir on October 20, 2018, before the arrival of Turkish President Recep Tayyip Erdogan.
People walk on a square in the historical Sur district in Diyarbakir on October 20, 2018, before the arrival of Turkish President Recep Tayyip Erdogan. (Photo by ILYAS AKENGIN / AFP)

With the looming possibility of worsening economic conditions and instability in the workforce, coffee house patrons who have recently become unemployed are unsure of when they will be able to secure more work. 

Yekda Sünkür, who spoke to Ahval News at a coffee house in Ofis, became unexpectedly unemployed during the summer when he was working at a car rental company at Diyarbakır airport. 

"I had a work accident on July 15, 2018, and the next day in the hospital I learned that my entry card (to the airport) was cancelled. The reason they gave was for a security investigation into me. I appealed the security investigation, however, I still haven't received any word back. We already have a really hard time finding jobs, and we then lose them without an explanation.”

Sünkür explained said his treatment following the accident lasted two months, during which time he was housebound. When he was able to leave the house, he began frequenting the coffee house more and more to visit friends. 

“When we would pass the time sitting at the coffee house in the past year, the bill was 15-20 lira – now it might easily be 40-45 lira. That might seem like a small amount, but it’s a lot of money for someone who is unemployed.”

Unemployment in Turkey is on the rise as businesses cut back on costs. The jobless rate rose to 11.1 percent in the three months to September compared with 9.6 percent in May. Youth unemployment is almost double that figure and many economists expect the number of jobless to increase in the coming months.

Sünkür said he had trouble paying his outstanding debts while unemployed. “I’m not alone – there are dozens of people like me,” he said. Interest rates on consumer loans in Turkey total more than 30 percent annually after inflation jumped. 

“I see the future with even more hopelessness. We've come to the point where we can't even leave the house. I had been unemployed in the past, but now I got the wind knocked out of me."

Kemal Aktay is another coffee house patron who became unemployed suddenly while working on the North Marmara Motorway Project, a 270-km stretch of highway that will connect northern Turkey.

After beginning work, Aktay said that due to the unstable nature of the project, workers were constantly let go for a variety of reasons. When it was his turn to be dismissed from the project, he returned to Diyarbakır. 

"One morning, you suddenly find that you are unemployed and that you have to return to your city. The only thing I'm happy with is that I'm not married, because it would have been much worse to go through this with a child.” 

Aktay said he could not find work due to the stagnation in the construction sector after returning to Diyarbakır. Even for the jobs that are available, Aktay said, competition is fierce. 

“I'm looking for a job, but it's nearly impossible to find employment because the crisis is so pervasive. When you go to apply for a job, you see that at least 1,000 other people are waiting for that job. There's nothing left in the way of hope.”

The construction sector remains in the doldrums – house sales are plummeting and confidence among firms in the industry is at the lowest in more than a decade, according to government data. Aktay spends part of his time working on the farm with his family and part of his time working with his uncle in a coffee house. 

“Of course, this is money to live off of, and what's left is coffee house money. I cannot imagine where the situation is headed, but we're getting hurt more and more every day."