(Reuters) - For the first time since they were nationalized in the 1960s, Cuba has opened the door to private management of some state-run cafes and food service outlets, often scorned for bad service and poor food.

The extension of President Raul Castro's plans to put more retail businesses in private hands is under way as an experiment in eastern Holguin province, where the government will lease to employees more than 200 small cafeterias this year.

In the bustling provincial capital, Holguin, private restaurants, cafeterias and snack shops with attractive names and menus provide stiff competition on almost every block to state-run outlets identified only by number and with state-dictated portions.

Osvaldo Santos Diaz, head of the state's food services in the province, recently told local media that sales would be down in 2012, "because 211 outlets will move to other forms of management."

National media have not mentioned the Holguin program, apparently because it is an experiment that will become generalized sometime in the future.

President Raul Castro, who took over for ailing brother Fidel in 2008, has been moving retail services into private hands as part of a myriad of reforms aimed at boosting the country's stagnant, Soviet-style economy.

Thousands of state barbershops, beauty parlors and service outlets such as watch and domestic appliance repair, shoe shining and carpentry shops have been handed over to their employees on a leasing basis after similar experiments that were not publicized by the island's state-run media.

Julio Cesar Zayas, director of food services in the Barajagua district of Cueto municipality, said the food outlets would be leased to employees to operate as private businesses, pay taxes and compete with thousands of private, mainly home-based cafeterias which have opened around the country over the last year.

"There are seven outlets in Cueto that will move to the new system in April," Zayas said.

FROM SUBSIDIES TO TAX REVENUE

Communist Cuba's state-run food services are notorious for providing poor service, dismal food, diverting supplies and filching customers by skimping on the size of state-assigned portions for everything from a ham sandwich or pizza to a cup of coffee or shot of rum.

The Paraiso, a rundown cafeteria that sells rum, soft drinks, cigarettes and snacks in the small mountain town of Barajagua, is on the list.

"I think this policy will lead to more earnings for employees and a better offer and service for consumers," said the Paraiso's manager Eusmar Gomez Rodriguez.

"Under the new system we will be able to directly purchase and sell what we want and offer more than we do now," he said.

A Cuban economist, who asked not to be identified, said such outlets historically operated at a loss for the state.

Under the new system, inventory theft should be eliminated because the employees will have an economic stake in the business and, instead of a loss, they should provide the state with tax revenues.

At the "Real St. No. 1" cafeteria in the Pueblo Nuevo district, manager Lourdes Mulet said final word on which state-run outlets would move to the new system had not yet come down, but she hoped hers would be among them.

"I think if you work hard your earnings will improve, though I'm not certain because this is new," said Mulet.

She currently makes 250 pesos per month, the equivalent of $10.00.



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