CAIRO - Looking at his half-deserted cafe in central Cairo, once bustling with customers day and night, Essam Ali thinks of cutting his losses and closing for good.

He, like the thousands of other cafe owners in the city, pulls down the shutters, reluctantly, at midnight.

Egypt has allowed cafes to reopen after coronavirus restrictions were lifted, but has limited opening hours in non-tourist areas to midnight, slashed capacity to 50% and banned water pipes.

Months of restrictions have hit cafes hard. Cairo, a city of some 20 million or so, never sleeps. Life picks up at night as residents seek to escape the daytime heat, promenading through the streets and drinking tea until the wee hours.

Cafes are found in almost every street and are an important employer. Ali has laid off 14 workers as daily customer numbers fall to 50-60 from some 250 before the pandemic.

"When I have 300 pounds ($19) at the end of the day, how can I pay for my products How can I pay for my electricity How can I pay my taxes," said Ali.

"I am honestly thinking about closing my cafe. Why Because it is not worth it anymore," he said.

The biggest business used to be in providing water pipes, typically handed from person to person within a group, for smoking tobacco.

Losing the pipes is not the only wrench. Customers are also struggling to adjust to the new opening hours.

"We are naturally a people that likes to stay up at night, especially during summertime," said 30-year old Salah Ali. "So the fact that coffee shops now close at 12 is, for us, culturally difficult."

Hassan Ahmed Mohamed, 65, who runs a small cafe, said this is the worst business has been since the cafe opened in 1960.

Egypt has been hit hard by the pandemic, which has hammered the vital tourism sector and also slashed Suez Canal revenues and workers' remittances due to a global trade downturn.

Egypt's President Abdel Fattah al-Sisi in March approved a 100 billion pound stimulus package, including payments of salaries for staff sent home by their employers and cash for informal workers.

Cabinet spokesman Nader Saad told a local television channel last month that cafes could open longer in tourist areas and would vary in summer and winter but otherwise hours would continue to be limited even after the pandemic was over as Egypt comes more into line with opening hours in the United States and Europe. Citizens sitting in a cafe beyond 10 pm were not productive, he added.

The government had first allowed cafes to reopen until 10 pm then last week extended hours to midnight.

The state press centre did not respond to questions on how the government is supporting cafes. Saad could not be reached.

($1 = 15.9200 Egyptian pounds)

(Additional reporting by Nayera Abdallah Writing by Ulf Laessing Editing by Alexandra Hudson) ((Ulf.Laessing@thomsonreuters.com; Reuters Messaging: follow me on twitter @ulflaessing))