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tv   The Profit  CNBC  November 19, 2016 1:00am-2:01am EST

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the degree in computer engineering, she hopes to launch his own start up. >> if you have a business and we
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become friends, can i invest in your company if i live in the united states? >> if you give me the money. >> you have to pay me interest. a lot of interest. >> you find a lawyer and we will do a contract. >> armando made me feel welcome. of course i can't invest in a cuban business yet. that's illegal. because of the u.s. embargo imposed after fidel castro's revolution. cuba has been cutoff from the goods and services and the economy needs to survive. despite free health care, housing and higher education, many are struggling. >> walking around the old city, i saw a place full of life, energized by the changes. desperate to boost the failing economy -- the government
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loosened their reigns on private enterprise. >> everything is made in cuba? >> yes. >> thousands are now working for themselves. >> very beautiful. >> i found them everywhere. even here. a sleepy street in a residential neighborhood this this tiny rented garage. welcome to burner brothers bakery run by a brother and a sister, tony and sandra ka macho rodriguez. >> good morning. i'm marcus. so the name is burner brr eer b? >> why not sisters? >> because i'm a guy. >> she is the boss? >> we are the bosses. >> okay. this is unbelievable. it's small. >> they started selling cookies out of their house in 2013, but
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now they have really taken off. with the retail space, univer l universauniversaseveral employees and a catering service. >> can i try something? i want to buy a box. a big box. guava and cavy. >> you are a dentist and you are selling sugar? >> yes. >> how much did that pay? >> they pay me 1,000 pesos. a month. >> that's about $50 a month for a dentist. >> you make more money selling donuts? >> yes. >> in one day? >> not in one day. >> pretty close. >> we will discuss it later. >> is it difficult to talk with the cameras because you worry about people seeing it? >> yep. >> tony and sandra are clearly
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doing well, but this is cuba. you can see the anxiety set in when i asked about money. like others i would meet, they didn't want to say too much. as a business owner, i respect that. their steady flow of traffic told me what i wanted to know. i guess they were making at least $100 a day. amazing when you consider most cubans live off of $300 a year. tony and sandra's bakery may be pulling in $35,000. >> you look like you love it. >> i can only say off the record. >> people probably think this is just a bakery. no. it happens to be thriving entrepreneurship in the head winds of regulation. they weren't taught this. she is a dentist and he is an
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engineer. can i see the kitchen? >> yes, of course. this is big! what's in here? >> that's an oven. >> this is an oven? from when? >> probably 1920s? >> it works perfect? >> yep. >> the workers i met are two engineers and a lawyer. like their bosses, they make more here than at their government jobs. >> where does everybody come from and where are they trained? >> we trained them all. >> they came here looking for a job and you took their nrnling clothes off and made them chefs? clothes off and made them chefs? and step? >> what they have to do. >> everybody likes sugar. >> everybody likes shochocolate too. >> you need money? >> no. they are not available right now. >> chocolate is not available.
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>> except the kind of chocolate we use. more than 40%. >> it's not available at any store? >> any store. >> i want to see where you buy your products. can we go there? >> everything here is locals. >> yes. >> what ingredients would you come here? >> we buy lemons and carrots and guava, pineapples and stuff like that. >> wholesale as we about it doesn't exist in cuba. there is no costco or wal-mart. just whatever is available from private vendors at the local market. >> this big? >> it's very sweet. >> you won't find eggs or milk here.
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only government stores are allowed to sell those. they are often in short supply. when it comes to running a business, there are obstacles everywhere. for starters, you can only work in one of 201 government approved professions. that's right. there is a list. you can be an accountant, plummer, palm tree trimmer or a baker. i love the feel of the place. if you wanted to open up five of these around havana, can you do that? >> there is a law against that. >> person, one license. >> you can franchise? >> franchise, no. it's a big enterprise. >> the burner brothers license is in sandra's name. they can only open a second bakery if tony applies if are a license in his name. >> i'm fascinated by the fact that you have become students of the rules.
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>> we have. >> what's unfortunate is that you have to to spend time studying the rules as opposed to growing the business. >> it makes it unique. the reason why i see an opportunity here, it's because it's not easy. if it were easy, you can get anything you want. you can get a license any time you want or open as many businesses as you want. you know how many people would open a bakery? >> tony and sandra are smart enough to know they could leave and take their trade skills of baking and merchandising and advertising anywhere, but they see the window of opportunity and the ability to be big in the future is greater here because they know the competitive landscape is not as competitive. coming up, tony and sandra have big plans. >> the one right here? >> that one there. >> there is one thing in their way. me. >> i'm telling you as your new friend, you have something
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forget what you think you know about cuba. forget the old cars and cigars and the souvenirs.
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i saw a new cuba with extraordinary talent in the most unexpected places. people like this. >> how are you? i'm marcus. she was shy about her english. i brought along a friend to help. >> do your customers come back through here? >> yes, but most of my clients aren't fat. >> welcome to my house. >> this is where she lives and makes her living. >> this is your office. >> i squeezed into a workshop barely bigger than a closet with sewing machines from another time. to everyone else is may look small, but to me it's really big. whoever i own today is because of my sacrifices.
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>> one of the top wardrobe designers for and film. she has done so well, she owns the business and this house. in cuba, that's huge. >> this is linen? she is called the queen of a traditional cuban shirt. it's her specialty. >> how much do you sell them for? >> she charges $60 a shirt. material and labor costs $30. it take as i day to finish each one. >> they are made one at a time? >> by one. >> i think we should charge more. >> yes, but in cuba it's a hard sell. >> she makes $240 in profit a month, almost times the average monthly salary. >> where do you get the fabric? >> that's a loaded question.
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>> loaded because like many cubans, she is forced to buy from el mercado negro. >> why is it on the black market? >> it's not in the stores. >> i want my own shirt. can you make me a shirt? >> it will be my pleasure. >> luckily there was enough linen left for me. >> it takes a lot of measuring. >> make sure you keep plenty. >> to raise her prices in cuba, she needs a store. that's tough here. the government controls most of the clothing industry. >> when you start to get confident, obstacles and limitations come up. you cannot do this or can do
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only this much. >> and hotels? >> i'm not sure. i guess it comes from the government. >> no matter how hard you work, you can only go so far. but she refuses to give up. >> come in. how are you? >>. >> then i met the reason why. her 5-year-old daughter, camilla. >> she works hard, doesn't she? >> very much and i'm very proud of her. >> i know she is special. >> that gives you tears of joy? >> against the odds, she made a better life for them both, but it may not be enough to keep them in cuba. >> does it scare you? >> translator: of course. it was never my dream to leave my country. i want my daughter to grow up
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where i did. >> but? >> translator: if i want a better future for her, i have to consider the possibility that she will go elsewhere. that really makes me sad because i love my country. >> i can see the day coming where she has to make a choice and it won't be an easy one. >> nice to meet you. >> you have a wonderful mother. >> say thank you. >> thank you. >> gracias. i will pick up my shirt in a couple of days. this is great. i got a hug too. >> after leaving her daughter, i took a walk up the street. i wondered if people here are running out of patience. >> it becomes available to people and they see their options. people are going to start to go after it.
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not because they want wealth or fame, but they want something brighter. it feels like you took a picture in 1965 and nothing happened. it's crazy. how are you doing, buddy? put your hands here. ready? >> the kids didn't seem to have a care in the world. their future looks bleak unless the cuban economy improves. i turned to someone who has been watching the situation closely. >> this was main street of old havana. >> a professor of latin america studies in new york. >> he visits cuba often and
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about the new business landscape. >> the change is insignificant. >> here said tuba is going broke. the price of socialism is just too high. >> will you get housing and health care and get a job. there is a basic bottom below which people are not allowed to sink. that bottom is fray and has lots of holes. one of the ways the state is allowing freedom is relieving itself from the burden of providing for people. >> the economic troubles led to another problem. >> the cuban population stopped growing and had a major problem with people cluhoosing to leave the country, mostly for the united states. especially young people don't want the same problem their parents did waiting for the future to come and it never arrives.
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>> a taste of capitalism has helped, but it's just a taste. >> in the direction of economic opening, but it's trying to control that opening. >> the cuban government continues to control almost every aspect of daily life. there is no free press. the internet is sensored. small business owners have been shut down without warning. in 2013, the state went after private clothing stores. >> the government closed them all down because it was competition against the government monopoly on retail outlets for clothing. >> when the government runs a business, it's not always pretty. i walked into a state-owned store unlike anything i have ever seen. >> can i buy a blender? >> the inventory was meager, largely a result of the u.s. embargo. this sold mostly blenders and tvs. >> where is the manager?
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>> don't come to cuba to buy sneakers. >> they have a monopoly of importing clothing made in other countries and reselling it to the cubans. a private person can't do this in cuba. >> can i buy shoes? i cannot? they haven't had any new merchandise since december. next week it's coming in? >> hopefully. >> the tables are turned when capitalism collides with socialism. >> what did it cost to build this house? $5,000? $10,000. >> i don't like the questions you are asking. [burke] at farmers, we've seen almost everything,
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so we know how to cover almost anything. even a rodent ride-along. [dad] alright, buddy, don't forget anything! [kid] i won't, dad... [captain rod] happy tuesday morning! captain rod here. it's pretty hairy out on the interstate.traffic is literally crawling, but there is some movement on the eastside overpass. getting word of another collision. [burke] it happened. december 14th, 2015. and we covered it. talk to farmers. we know a thing or two because we've seen a thing or two. ♪ we are farmers. bum-pa-dum, bum-bum-bum-bum ♪ my mmade a simple trip toonic the grocery storesis anything but simple. so i had an important conversation with my dermatologist about humira. he explained that humira works inside my body to target and help block a specific source of inflammation that contributes to my symptoms. in clinical trials, most adults taking humira were clear or almost clear, and many saw 75% and even 90% clearance in just 4 months. humira can lower your ability to fight infections,
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cuba is a country marked by neglect. many of its beautiful buildings are crumbling into dust. still, there are places that speak to what once was and could
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be again. after a few days in town, i wanted to see more. so i hit the road. i headed about 25 miles southwest to meet this man. >> how are you doing? marcus. >> in farming circles, he is a superstar. four years ago, there was nothing growing here. >> we grow more than 60 types of vegetabl vegetables. >> row after row of fresh green produce. he has a ph.d. in agriculture and used to lecture around the world. >> we're teach people about the environment and how they can eat better. >> when the state okayed farming as a private business, he quit the classroom and got his hands dirty. >> does that need to be delivered? let me help you load it up. >> twice a week he packs up the aging soviet sedan selling fruits and vegetables to the top
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restaurants. all that arugula adds up. >> how much do you get for selling all of this. >> that are would be about $400. >> not bad. >> not bad. >> he is not in it just for the money. fernando sees farming as a way to promote socialism. cuba's economic model since the revolution. he doesn't even own the land. >> we didn't buy the farm. you cannot buy land in cuba. >> a state merely allows him to work on it. >> the land is really -- >> it's a social asset. >> you can see social asset. i will say government asset. >> in a capitalistic way of thinking, you can take a benefit from that square of land, but that will be there for thousands of years more. the land is a common asset. >> he not only pays his workers more than the average government wage, but he feeds and houses
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some of them too. he is socialist to the core. i wondered how he got his new house. >> beautiful. it's very smart how you built it. so the breezes can cross. what did it cost to build this house? >> you are asking me difficult things. i cannot tell you how it cost. >> 5,000? >> maybe more. >> 10,000? >> less. >> where do you get the money? do you borrow from the government or have family send it to you from america? >> i don't like the kind of -- >> you can tell me. >> i don't like the kind of questions you are asking. >> does it make you uncomfortable? >> maybe. >> he told me the money came from lecturing overseas. not something most cubans get a chance to do. >> i will tell you why i'm asking. i'm not asking for any reason
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other than to understand. >> i can start asking you about your private -- how you invest your money. >> i don't. cash only. i invest in people like you. >> how much do you pay to your employees? >> $12.25 per hour. that's the minimum. if you work for me, that's the minimum you make. >> do you have one wife or more than one? >> i'm not married. >> not married? >> no. you gay? >> i'm not gay. any more questions for me? >> yes. let me think. >> anything you want. i like mango juice more than average juice. >> fernando seemed satisfy and our talk turned back to his farm. >> can i see the bees? >> i'm not going in there. >> i have a dress for you.
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>> as long as i don't get stung, i don't care how hot it is. >> when it comes to bees, i have no comfort zone. >> we started here with one beehive. now in this moment we have 80 beehives. >> the hives yield about three tons of honey each year. he is forced to sell most of it to the state and the say the resells it for more than three times that. >> you sell it for $900? >> they sell it for three times b you they cover transportation and give advice for us. >> they give you advice? i can give you advice and it won't cost you. >> at least the government is not buying his vegetables. those he makes real money on.
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later that day the greens we packed up arrived. it's one of havana's hottest restaurants. the magnet for celebrities like madonna, rihanna and jay z. enrique owns the place. >> welcome. >> this is beautiful. >> he grew up in the building. people eat where he used to sleep. >> this is your original apartment? this is where you grew up. >> this was my bathroom. >> very cool. it cook more than a little creativity. you can limit a restaurant to just 50 seats. he figured out a way to at another 50 by applying for a cafeteria license. >> how many seats do you have?
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two seatings so 200 and how much does it cost for a person to eat here? >> it's like $40 a person. >> you will do $8,000 in a night? >> on the best night. >> and the worst night? >> 3,000 or 4,000? >> less. >> no! i have seen that before. cubans don't want to call attention to the money they are making, but his success is obvious. he just opened a new roof top bar with great views. and the tourists are drinking it in. >> what do you think of the view? >> the best part about it, if anyone wants to experience in cuba. dinner here costs the average cuban almost two months of salary. he wants to change that. >> more locals, less tourists. that's my dream.
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>> how do you think that becomes possible? >> i hope our cuban economy can grow and develop. >> with 40 employees, he is helping to grow that economy. even though 20 of his best workers recently left for america. nothing is easy here. >> i have a lot of respect and admiration for you, but i want to eat your food. let's go eat some food. >> up next -- >> you ever go fish something. >> no. >> travel down any road in havana and you will find a surprise at every turn. ok! impaciente!
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at burner brothers bakery, business has been sweet for sandra and tony. they are setting their sights on a new venture and i wanted to check it out. >> where is the building you picked? >> that corner. the white one. >> they have gone and bought a new space in a real hot spot where the cruise ship stops. this is prime real estate. i had a lot of questions. >> how much was it? >> like $46,000.
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>> $46,000? it's the whole building? >> just the bottom. >> buying and selling has only been legal for years and only native cubans can buy in. >> you can't take customers up the stairs? >> no, we are going to rebuild. >> they are getting into the restaurant business. >> you are opening up a fancy restaurant? >> we want to make this a bar. we want to sell drinks and also meals. >> i'm skeptical. the place needs a ton of work. new stairs and balcony and kitchen. i'm worried it's a money pit. >> what are do you think it will cost? >> i don't know. $40,000. >> only $40,000? >> that's all we have. >> you have is saved already? >> yeah. >> you sold a lot of donuts.
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>> that money is not from the donuts. >> what is it from? >> my dad and my cousin who are partners too. >> it's a family business? >> yes. >> what do you forecast the business is going to make in the first year after you pay the bills? >> we haven't done that yet. >> they're did not do the math on this one. >> open seven days a week? >> yep. >> good luck by the way. >> they are planning on an average bill of $15 a person and hoping to take in $1500 a day. with just 42 seats in the restaurant, they need a lot of turn over. restaurants have one of the highest failure rate of any business.
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they have a successful bakery. i don't know why they don't open up a second burner. >> why don't you do something you know. >> this is something we know because we started from zero. >> we will do something. >> i know you probably won't listen to me, but as your new friend, you have something special. don't ruin it. >> then i learned something else. they were offered $200,000 for this place. they could profit $154,000 without doing a thing. >> my big question is, how many years, how many people, how much bull, how much aggravation do you have to do to get $154,000 right now? think about it and see how much money you are making in the
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burner brothers and go from there. this is a bad idea. >> okay. >> i'm being honest with you. i'm sorry. >> it's never easy telling someone their dream is a mistake, but the numbers don't lie. >> maybe in the future, the government will allow franchising. maybe. when they do, you are ready. if you build a few more burner brothers, you could be the dunkin donuts of cuba in ten years. >> i had no idea what tony and sandra were going to do. i knew i wanted fresh air. i called up my favorite taxi driver, armando, to do some sightseeing. we took a ride down havana's famous highway along the sea. it's a fathering spot for locals. >> do you go fish something. >> no. i don't know how to do it.
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it's not only that. >> if hemingway can do it, so can armando. we got out to ache a closer look and throw down the challenge. >> what's this? we are doing a fishing tournament. whoever catches the biggest fish in the next ten minutes gets $20. you have to do it with me. $20. they me it's not possible. keep fishing and not worry about it. >> the sun was fading fast, but barely a nibble. >> that's it, right here. okay. this is the winner. show them your fish. >> give him the money.
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>> his father is right there. >> so with a little seed money, perhaps another cuban entrepreneur is born. coming up, six women, a crock pot and the drive to succeed. >> we are doing what we want to do. trying to change our lives. per roll
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there is a word i heard over and over in cuba. resolve, ingenuity, making it work. it's a way of for the new enterprises. >> sandra? marcus. nice to meet you. >> years ago, a simple luxury like hand made soap didn't exist here. that's where sandra stepped in. >> thank you for having me. >> she and her six employees turned this kitchen into a factory line. >> we are selling about 1,000 soap per month. >> from three years ago, 100 a month. >> sandra's business is called brujas. witch's soap. >> why witches? >> because witches make potions
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with plants. >> they start with soap from the government store. the first step, they have to melt it down. and yes, that's a crock pot. these are some resourceful witches. >> you stir this? can i do it? >> yes. you sure? >> yes. >> they spoon the soap into molds and it dries for five days. you would think the package is the easy part. not here. >> i could use another bag, but i need this one. >> where do you get it? >> sandra can't get bags and what she does next is part martha stewart and part mac gifer. >> you cut it and make smaller
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ones? >> it doesn't matter that it's soap. what matters is she wanted to generate and figured out how to do it. they have the bag and the fragrance and she is reconstituting them and coming up with something more special. i wanted to see sandra's store, so i headed down to the artisan's market near the port of havana. i saw booth after booth of private businesses. crazy to think two years ago this was illegal. >> sandra offers ten different types of soap and each costs $1 to make. she sells some for $2 and some for $2.50. the government charges her $94 a
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month in rent. >> you have to sell 45 soaps to pay rent. >> we have sold 26 today. >> i love that you know this. most people don't know that. >> you have to buy one soap. from my friend. >> the market is a huge attraction. sandra should be able to boost her traskt easily, but it's not that simple. >> you are in the corner. go to the other corner and do another one. >> it is not allowed to have two stands with the same owner. the same name. >> you cannot have two stands? >> nope. >> this sucks. >> still there are some things we can fix. i want them to move the sign so customers can see what they are selling. >> so take the sign. >> what they should be selling
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is soap. >> i don't understand the connection. >> i know what you mean. >> why do you do it? for the customer, it's confusing. >> instead, sandra should be selling products connected to soap like candles or room spray. an easy idea, or so i thought. >> the problem with that is the bottom. it's difficult in here to get that. >> what about for candles? >> it's difficult, but we can try. >> i love that about sandra. to her, nothing was impossible. >> we are making something different. at least in our country, step by step we are growing and learning. >> for you to grow up and surround yourself with good people and make a living with
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mow help, it's a bigger deal than you think. a really big deal. is it emotional for you to think about it? >> oh, yeah. >> why? >> no, no, no. >> what are you crying about? >> i don't know. because this is a way to do what we want to do. because we are our boss and we -- >> control your destiny. >> yeah. it's the way. >> this is one thing that's important. emotion in business is important. if anybody takes the emotion out of business, the business will die. >> up next, a big decision. >> don't ruin it. >> a beautiful souvenir. >> can i put it on? >> and the biggest question of all. >> if this country doesn't change, are people going to stop trying? >> when the profit in cuba returns.
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>> per a week in cuba, sweltering, satisfying. something i will never forget. >> booth number 432. >> i will be able to tell people 30 years from now that i had my haircut in cuba in a communist country. these people had nothing and they figure it out. i am learning that that i have to be more resourceful. >> before i left, i had one final thing to do.
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>> back here again. >> squeeze down that alleyway into the home where my custom shirt was waiting. >> so beautiful. can i put it on? the verdict? perfect. >> i love my shirt. >> the queen earned her title. >> it's comfortable because i have been so hot. >> the laws don't allow it now, but soon i can help her sell her shirts in the united states. >> maybe, just maybe the shirt could be called camilla demarcos. >> muy bien. >> as for tony and sandra -- >> this is the restaurant? >> after telling them not to open a restaurant and concentrate on their bakery business? >> you are building a brand. you guys are the burner brothers. >> they took my advice and
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dropped the restaurant idea. they are selling the new space and will invest the profit back into their bakery business. as it turns out, a smart and lucky move. officials put a freeze on new restaurant licenses. a blow to the business community. >> if this country doesn't change, is talent going to be suppressed? is it going to be lost? are people going to stop trying? >> cuba stands at a moment of possibility. tensions with the u.s. have been eased. the people i met are hungry for the chance to rise or fall on their. but make no mistake. their fate may rest less in their hands than those of their government. i'm marcus limones.
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