Family Testing New Recipe for Success at Restaurants

Amazing things happen when you step back from your business to learn how it actually operates.

Until last summer, the children of Manuel and Enedina Rojo ran their three Taco Ready restaurants in Los Angeles in much the same way as their parents had since 1976, except for one thing: They dreamed of building the chain, with outlets in Baldwin Park, Covina and Rosemead, into something much bigger.

As profiled in this space in June, Taco Ready was a successful family business run largely by habit, serving traditional Mexican food to a neighborhood clientele. The Rojo children--Nora Rojas and her brothers, Sergio, Carlos and Juan Pablo Rojo, understood that if they wanted the restaurants to grow, they must turn themselves into professional managers, and they suspected that ad hoc methods that governed operations at Taco Ready might get in their way.

What progress have they made since then?

Spurred by Gail Peterson of Peterson & Associates, a Los Angeles business consultant with expertise in the food industry, the Rojos began to analyze how their operations actually run, as distinct from how they seem to run.

First was an analysis of the Taco Ready menu to cost out each item--an exhaustive process, given the length and complexity of the menu. It was also a touchy process. Taco Ready, after all, is a family business, with recipes developed over many years by Manuel and Enedina Rojo and refined by Nora.

The results say a great deal about the differences between a family-run operation and a professionally managed business--and about how to make the transition from one to the other.

Nora and her brothers discovered, for starters, that they could save more than $50,000 annually by buying a more expensive cut of meat for their carne asada and marinating it differently--with pureed, not diced, tomatoes and onions. The new method, which takes less time, resulted in less shrinkage, and this difference made up for the higher price of the meat.

To institute the new practice, however, they had to convince their parents it was a good idea.

“First, we did a blind tasting with the old and the new, and we couldn’t tell the difference ourselves,” said Nora Rojas. “Then we tried it on our parents, and they couldn’t either.”

A similar analysis of their chicken dishes cut these costs by 20%. Among other things, the Rojo children also:

* Began work on a procedures manual for food production.

* Instituted portion controls.

* Reviewed all supply contracts.

* Wrote job descriptions for themselves and every employee.

* Met weekly to hash out problems, assess progress and review their financial position.

The practical benefits of all this were very real: Armed with the knowledge that some items on the menu made more money than others, they trained their employees to ask whether customers might like to add one of the more profitable items to their order--a common practice among successful restaurants known as suggestive selling.

“We learned the basics--food costs and labor costs,” said Sergio Rojo, Taco Ready’s chief executive. “We recognized that this is a business, not a family project. We also learned to deal with each other in our respective positions. We see that it’s our future, and we want to make it grow.”

In all of this, of course, Sergio and the others have only begun the hard work of running Taco Ready as professional managers. But their enthusiasm and commitment drew one more family member, Lulu Lozano, back into the fold. Married and a mother, she had left operating the restaurant to her siblings but returned to have a hand in reorganizing the business, largely by helping Juan Pablo, known as J.P. and the family’s de facto chief financial officer, keep track of Taco Ready finances.

“I saw that good things were happening,” Lulu said. “I wanted to be part of it.”

“We all want this,” her sister, Nora, added. “In the past, I always thought of it as a secure job, and as long as people kept coming in the door, we’d be OK. Now we see that there’s a lot more to it.”

The “more,” of course, is the day-to-day detail of running Taco Ready as a business--the humdrum detail that is crucial to success, according to Peterson, the consultant who, along with the Rojos’ Santa Monica attorney, David Pisarra, has shepherded them this far.

“These are enthusiastic kids,” Peterson said, “and they’re learning that having a business and actually running it are two different things. They now know what every item on the menu costs and what their ancillary expenses are--insurance, etc.--and how all of this fits into making a profit.

“That’s a really big deal.”