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‘It’s a death sentence for our business’: How a pioneering Stockholm food truck lost out on Covid-19 support

A Californian-Israeli food entrepreneur behind one of Stockholm's first food trucks has recently learned the business will not qualify for Sweden's coronavirus business support programme, despite being pushed into a loss last year. Erez explains how he fell through the gaps.

'It's a death sentence for our business': How a pioneering Stockholm food truck lost out on Covid-19 support
Erez Ofer busy at work in his food truck. Photo: Falafel Stockholm

Erez Ofer and his wife Stephanie started their food truck family business, now called Falafel Stockholm, in 2014, hoping to recreate the hummus, falafel rolls, and fresh salads they had enjoyed while living and studying in Tel Aviv. 

From the start, their food truck has been a hit, catering for conferences for companies like H&M and Björn Börg, and big events like Stockholm Pride, and even being featured in an advert for the accounting software company Visma. 

But the onset of the coronavirus pandemic meant they had to rapidly change their business model. 

“We barely had any catering or events, so we had to work our asses off with the food truck,” Erez says.

“We had to have the truck open for lunch and dinner every day, in different parts of the city, all over, because you’re only allowed four hours in the same spot, and we were able to have only a seven percent reduction in summer sales compared to the year before, which I’m really proud of.” 

Photo: Falafel Stockholm

What he didn’t realise is that all of this extra work would turn out to be counterproductive due to the increased costs it required and the criteria for receiving government support.

In order to receive support under the Swedish government’s coronavirus business support programme, called ‘omställningsstöd’ or ‘adjustment/transition support’, a business needs to show a minimum drop of 40 percent in sales. 

But Falafel Stockholm’s huge adjustment efforts actually led to decreased sales. 

The problem was that in order to keep sales steady, the business has significantly ramped up its costs, pushing it into a net loss. 

“It took a toll on the costs of the company, because we had to be open for much longer, we had to have our employees there for much longer, more driving, all that kind of stuff,” says Erez.

As a result, the company expects to make a loss of about 300,000 kronor this year on 1.5 million kronor in sales. 

It was only at the start of March 2021, after waiting more than six months to be able to send in a request for Omställningsstöd for August to October 2020, that he learned that his business would not qualify. The Swedish Tax Agency has been directed to only consider sales reductions of 40 percent when considering the economic impact of coronavirus on a business.

This is not the only way that Falafel Stockholm has fallen through the gaps. To be able to take the food truck out daily, he and his wife have hired more staff. But he can’t get help paying employees’ wages under the korttidspermittering (short-term lay-offs) system, which allows employers to temporarily get the government to supply up to 60 percent of employees’ salaries, if their working hours are reduced. 

“Based on their policy, if you’re able to hire new people, then you don’t need korttidspermittering and they’re not thinking that sometimes as a business, you need to grow in order to be able to survive.” 

“If you’re only looking at the sales, it doesn’t tell the whole picture of what’s going on in the business, and it’s not just us, there are a lot of other businesses that are having similar problems.” 

But despite contacting authorities to explain the situation, he said he has only received a standardized answer to his letter that he did not find helpful.

Eva Bodén, an advisor at the Swedish Tax Agency, said that Erez is not alone in his frustration at not qualifying support. 

“There are a lot of others who think they are losing out because of the way this has been set up,” she said, adding that many businesses had also seen their support reduced when the rules changes in July after a decision by the European Commission.

“It’s always the case that when you bring in a law that there are some people who don’t benefit.” 

She said that many restaurants, which have seen revenues fall after they were stopped from selling alcohol in the evening, and then closed after 8.30pm, were likely to qualify. 

The Vegan Schmegan truck, as it was previously called, at the Matholmen food festival in Stockholm. Photo: Falafel Stockholm

In January, before learning that they would not be eligible for omställningsstöd, after seven years searching and with the help of investors, Erez and Stephanie opened their first restaurant in the Vasastan district of Stockholm. 

Despite great reviews and an enthusiastic reception from the couple’s regular customers, the restaurant’s sales are being depressed by the pandemic.

“I’d say, it’s probably on average about 5,000 or 6,000 kronor a day, which is not enough to get by,” Erez says. “Considering our costs, we need around 7,000 or 8,000 minimum per day, which I think is a very reasonable expectation. I’m not in this to be greedy or get filthy rich. I’m doing this because it’s something I feel passionate about, fresh homemade food.” 

However, even this extra money means that their business will not qualify for omställningsstöd for all of the coming year, despite shouldering heavy start-up costs. The couple say this is basically a death sentence to the business. 

The Falafel Stockholm restaurant has got great reviews but hasn’t been as busy as hoped. Photo: Falafel Stockholm

Right now, Erez, Stephanie and their five children are going deeper and deeper in debt to keep the business going. 

“We can’t afford to pay taxes, so we are having to go into debt and take a loan from the tax authorities, and we’re going to have to take another loan from ALMI (Sweden’s state-owned bank for small business startups) to help us get through this as well.

“But you know, there’s personal liability for these loans, and also there’s an interest that needs to be paid. It’s really tough, we have paid our taxes for years, we and all of the other small businesses in similar situations have gotten royally screwed.” 

Member comments

  1. You had me on-side at the start, but opening a restaurant in the Vasastan district during Covid and whilst the food truck business is making a loss and reduced sales, and without knowing whether you qualify for government support, is a HUGE risk and irresponsible. Why would the government be responsible for back-stopping a private business taking this amount of risk? I’m afraid you’ve made some miscalculated decisions and should count yourself lucky and grateful to have received loans on this basis

    1. Because the government has already dismantled responsibilities for its citizens. What can we hope from such a greedy and calculating government?

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WORKING IN SWEDEN

INTERVIEW: Does Sweden have a distinct management style?

The Local's Paul O'Mahony interviewed Pernilla Petrelius Karlberg, lecturer at Stockholm School of Economics and researcher at the Center for Responsible Leadership about the Swedish style of leadership.

INTERVIEW: Does Sweden have a distinct management style?

Does Sweden have a distinctive management style?

The Swedish style of leadership is often said to be characterised by so-called flat hierarchies, where everyone is able to – and expected to – contribute their ideas and input to tasks, regardless of whether they are in a leadership role or not.

Pernilla Petrelius Karlberg told The Local that there are a number of different aspects which can influence management style, although Sweden does have a distinct style.

“I think that there’s definitely an idea that there is a specific Swedish or Scandinavian management style,” she said. “But I think from a research perspective, it’s much more complex, because we tend to generalise or stereotype.”

“It’s got a lot to do with the company culture and the culture of the country,” Karlberg said, “There’s definitely an idea of Scandinavian leadership, I think we have a common idea of what that is, but then, is it actually practiced everywhere in Scandinavia or in Sweden? That’s another issue.”

“In many of our organisations we talk about Scandinavian leadership where the leadership is very international, it’s a mix of different people from different cultures.”

Sweden is a very individualist society, which is also reflected in Swedish business.

“I think the core of what we talk about when we talk about Swedish leadership is the fact that leaders and managers also call on co-workers to take ownership on the task and individualism comes into business,” Karlberg said.

“It’s even expected, and co-workers take that ownership, and they engage and they take responsibility for the outcome and the result. So it’s the total opposite of micro-management in that sense.”

This culture of ownership and engagement also applies to managers, Karlberg explained.

“To generalise, in a Swedish setting, if there’s a meeting with the boss, the co-workers will expect to be listened to, and to be involved in a conversation and give their opinion on things. And that’s also a way to motivate people, in a Swedish sense.”

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Can lead to cultural clashes

This expectation in Swedish workplaces can lead to clashes if employees from other countries are used to a different system, Karlberg said.

“In another culture, say Finland, for example – I’m just generalising – you go to a meeting with your boss and you expect the boss to motivate you and to tell you what to do. So if you had a Finnish manager in a Swedish context, Swedish co-workers would probably feel neglected or frustrated for not being involved. ‘No-one asked my opinion, I want to share my opinion, my opinion matters'”.

This can also happen in situations where a Swedish manager is managing a group of employees from a different culture or country.

“A Finnish crowd with a Swedish manager might be very frustrated if the manager just asks questions and doesn’t seem to have a direction of their own. There’s just different expectations”.

However, there is also a collective aspect to Swedish workplaces, which foreigners working in the country often pick up on.

“When I work with international crowds, they tend to notice that Swedish co-workers and managers are very collective, they want to have consensus, they have to discuss everything, and it takes forever and it can be very frustrating.”

Swedish co-workers aren’t afraid to speak up though, if they feel that the decision their manager is making is wrong.

“But there are a lot of behaviours where Swedish co-workers will not accept a decision. For example, if they feel that the idea that their manager is bringing is wrong, it will actually be their duty to speak up, not in a confrontational way, but to say ‘Hmm, you know, this idea about doing it this way, it’s probably not a good idea.'”

“And non-Swedish managers might not always appreciate that kind of reaction. And if it continues, and the manager says that this is the way we’re gonna do it, the typical Swedish coworker will insist that this is the best way, and then there is a clash – again, they expect to be listened to and taken into consideration.”

How do you know when a decision has been taken in a Swedish workplace?

This need to feel informed and included in decision-making can in some cases make it difficult to understand at exactly what point a decision has been taken in a Swedish workplace.

“It’s a different process,” Karlberg said. “It often involves a calculated plan for taking the time to introduce the decision, discuss it, and make people feel that they have been informed.”

This aspect of the Swedish workplace culture caused issues during the pandemic, when many employees began to work from home.

“Decisions are taken in a much more informal way, and it can be difficult to pinpoint exactly when something was decided. And we also saw that during the pandemic, that the typical Swedish organisation – which is very non-hierarchical – suffered a lot, because a lot of leadership is practiced in an informal work environment.”

“So when people were taken away from that environment – because suddenly they were working from home – it was sort of, you know, ‘how do we practice leadership now?’, whereas in an organisation with a much clearer hierarchy, it was never an issue where decisions were made or how leadership was practiced, because it was done in a different way.”

“And in the more informal, flatter organisations, we had to find a different way to do that, to translate into the virtual room.”

Despite this, Karlberg does believe that Sweden’s leadership style is effective.

“I would say that it is, yes. We stand out pretty well as a nation when it comes to different types of national measurements of competitiveness. We score quite high on that. Of course, there’s also a drawback, if people don’t want to take that responsibility and ownership, because then it’s not typical that the manager would step up and change the leadership style. So it depends on whether you actually share the same expectation.”

Where does the Swedish leadership style come from?

Sweden’s collaborative leadership style is perhaps a product of Sweden’s history, Karlberg said.

“We have always been a small country, very dependent on export. And that means that we had to adapt to the rest of the world and to other markets, but also having to collaborate – we’re too small to quarrel or fight.”

“This has been a way to bring people together in the same direction – it’s a little bit like how we work with the unions with much more of a collaborative focus instead of being confrontative, because it’s simply not rational for a small country like us.”

There’s also a strong tradition of independence in Sweden, Karlberg explained.

“There’s a genuine tradition of independence in the sense of mutual respect. And of course, a lot happened during the 20th century with the development of equality and the whole idea of individualist thinking. Where we’re individualistic with regard to family, with regard to gender, with regard to our roles in society.”

“I think that plays a part as well, with equality and also that everyone matters in that sense.”

You can hear Paul O’Mahony’s interview with Karlberg in our Sweden in Focus podcast where we discuss all aspects of life in Sweden and shed light on the latest Swedish news. Listen and subscribe.

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