Season 1 Episode 20
Aarón Sánchez, celebrity chef and authorLeveraging mentorship, experimentation and business savvy like a pro
Aarón Sánchez is a celebrity chef and TV personality. The third-generation cookbook writer shares stories about his fascinating heritage and his culinary journey from New York City to New Orleans. Aarón is the type of entrepreneur who believes in constant reinvention – and he’s been mentored by some of the biggest names in the industry. He shares his unique perspective on teamwork, mentorship and opening the door to exciting business opportunities.
Aarón Sánchez learned you could create a career in the kitchen from his restaurateur mother. He got his start in a “boot camp” with Chef Paul Prudhomme, and from there built a fascinating career described by one word: reinvention.
Aarón keeps his eyes open for unexpected opportunities, and he’s learned the business from some of the industry’s finest. Aarón was kind enough to sit down with The Entrepreneur’s Studio to share stories and explain his unique take on building a career in the food industry, mentorship and making business-savvy decisions as a restaurateur.
This is part one of our conversation with Aarón Sánchez. Want to be alerted when we drop the conclusion of this conversation? Visit theentrepreneurs.studio and subscribe for notifications and other exclusive content from The Entrepreneur’s Studio.
Below is an edited transcript of the conversation. In the episode, you’ll hear about:
- Discovering the career path one can take through food
- Having a culinary voice and being tolerant are key to becoming a chef
- Mentorship and paying your dues as an entrepreneur
- Opening a restaurant is no small feat
- Gaining business savvy and the lifecycle of a restaurant
- Being willing to experiment and try new things
- Forecasting trends and heeding customer expectations
- Understanding your costs to make accurate projections
Discovering the career path one can take through food
Chris Allen: All right. Well, I want to welcome you to the studio, Aarón Sánchez. Good to have you. So glad to have you here.
Aarón Sanchez: Yeah, beyond delighted, I’ve been looking forward to this day, coming here to Oklahoma City and having a chat with you.
Chris: So good. I’ve looked forward to having you here and I think a big reason for that is the way that I know that you’ve started, and a piece of your story and the richness in your story, the richness in your heritage that you still bring today. But then at the same time, just how successful you’ve been with your personal brand and still being an entrepreneur.
I think not everybody has the same, I’d say, level of success that you’ve had, but there’ve been some really awesome things that I’ve heard you say along the way. Us getting to know a little bit about each other that I think will really help people carry through even some of the hard times that we’ve been facing the past couple years.
Aarón: Absolutely, yeah. The idea of an entrepreneur, I think it casts a really large net. I think at its core, it’s that feeling of not being complacent, and trying to see how you can touch as many people through a business lens as possible. Constantly try to recreate yourself and give people a reason to write about you to come back and see what you’re doing. That’s kind of one of those things that was ingrained into me very young.
Chris: You were raised by a restaurateur, so this isn’t new for you.
Chris: Tell us a little bit about that.
Aarón: Yeah, I come from a restaurant family. My mom, talk about an entrepreneur. She’s kind of like the Mexican Tina Turner, if you will. She divorced my father when we were very young, and she was a social worker and she used to cater. We’re from El Paso, Texas, and she would cater at night after she finished her day job to try to make extra money.
She was born in the cattle ranch in Northern Mexico, so my family were middle class to upper class Mexicans, but in the very hard industry, which is the cattle industry, and then everyone kind of moved across the border. My mom chased her dreams of having her own restaurant in New York City. We moved there in the early 1980s, and she just went after it.
Chris: What kind of restaurant was it?
Aarón: It was a Mexican restaurant. She was bringing the traditional flavors that she grew up eating, but making some alterations and some changes along the way, and focusing on regional dishes from all over Mexico, and bringing that forward to the New York audience, which at that time didn’t really have a good grasp of Mexican food.
The Fodors [Travel] Guide back in the day said that Mexican food in New York City in the early 1980s has a striking resemblance of what a monkey has to a man. You know what I mean? That’s how bad it was.
So much has changed in 40 years. My mom was really about that whole movement early on, about American regional cuisine and bringing that.
Chris: What’s an early memory of you experiencing your mom starting a restaurant, or what’s the thing that’s the most vivid memory that you have of that experience?
Aarón: It’s a great story, actually. My mom, the way that she got to New York City initially, is she went to New Orleans and took a cooking class with Paul Prudhomme, the very famous Cajun chef in the early 80s. He was about to open up K-Paul’s, his namesake restaurant that he had for 45 years, or 40 years.
He was in the process of doing it, so he was doing cooking classes and my mom and my grandmother, my mema, who was also a fantastic cook and a cookbook author, went and they did this kind of pilgrimage there.
Chef Paul and my mom struck up this beautiful friendship, and then he said, “What are you doing?” She goes, “Well, I’m divorced, I have twin boys.” I’m a twin. “And I cook.” And he’s like, “Well, look, if you want to move to New York, I have a friend of mine named Warner LeRoy who owns the Tavern on the Green in Central Park, and I can get you a job there.”
She makes this unbelievable journey to New York City, we have all of our possessions in a catering van and $8,000 to our name. We drove from El Paso all the way up to New York, and there was this epic evening that a party was thrown at Tavern on the Green because the owner of the restaurant was a gentleman named Warner LeRoy.
His parents were, I think, the director of “Wizard of Oz,” something crazy like that. He lived in The Dakota on 72nd Street, one floor down from John Lennon and Yoko. Sean Lennon is my age, and then Warner had a son named Max, who sadly passed away, and Max was also my age.
There was this kind of interesting New York vibe. Warner was this larger-than-life dude, just threw these epic parties where there were Russian dancing bears, and crazy stuff. He realized that there was no American regional cuisine yet.
He brought my mom to cook Mexican food, Paul Prudhomme to do Louisiana food, and this little lady named Alice Waters from Chez Panisse, and it was this incredible evening where my mom was introduced to the food community in New York City, and James Beard and all these movers and shakers.
I remember that very vividly as a young kid, the importance of this meal, and that’s how my mom sort of debuted, if you will, a little bit.
Chris: Has that been something that’s kind of carried with you? Was that a really big impression of like food means something?
Aarón: Absolutely, it’s a really good way of putting it. I didn’t understand until that moment how food touches people’s lives and you can make a living out of it. I just thought you cooked at home, I didn’t understand the career path that one can take through food, and that was really eye-opening.
Chris: You’ve got a home in New Orleans now, right?
Having a culinary voice and being tolerant are key to becoming a chef
Chris: How did you get from New York to New Orleans?
Aarón: Well, I’d always go back. I lost my father when I was 13, and I reacted very poorly to it. Obviously, a teenager is already an incorrigible piece of work at that age, no matter what, and losing your father figure at that time, I rebelled and was just not focused and kind of cutting up. My mom sent me to Chef Paul Prudhomme as sort of a boot camp and tried to get me right. A little intervention.
I went down there, and then he became my father figure. He never had children of his own, so he always took me in as his boy. I would do that through the summer, then when I was 18, I came back and I spent a year there.
I started my career path working with other chefs and then eventually opened up my own place in New York City in the Lower East Side, and then I had those restaurants, the other one I had in Tribeca, for about 15 years. And then, about eight years ago, I opened up Johnny Sanchez with my friend John Besh.
I was commuting back and forth for the first year, and I just started seeing New York lose its luster. When an artist can’t afford to live in a city, it becomes soulless. Artists are the heartbeat of a city, and they need to live in a place that’s affordable so they can create art.
I saw that happening in New York, where it was just becoming this corporate wasteland, and I was just so turned off by it. I just said, “Let me go and chase the art and have, I think, a better quality of life.” That’s how I got to New Orleans.
Chris: Oh man, that’s amazing.
Aarón: Yeah, I love it.
Chris: Artistry definitely is something that shows up in being a chef. You’ve got this massive impression that food can change people, food can bring people together, and you’ve got this artistry connection. Talk to us a little bit about how the “I’m going to be a chef” moment happened.
Aarón: All the clichés of the kitchen. Anthony Bourdain narrated something really beautiful about it. We’re kind of kitchen pirates, and we’re kind of like these cast-off segments of life. You can find a refuge with other people that are a little off. You know what I mean?
Aarón: Because you got to be crazy to work in a damn kitchen.
Chris: It’s the land of misfit toys.
Aarón: Yeah, exactly.
Aarón: I just love that part of it. I love the idea of the camaraderie. I love the fact that we would work hard and play hard, and then I just figured out that I’m not good at having bosses. I don’t like being told what to do.
So, I figured I had to really sort of get as much experience as I could, and through this process, form my own culinary voice and my style. I guess when I knew I wanted to be a chef was right when I got out of my second trip to New Orleans. I said, “Look, this is what I want to do.” Because I have a tolerance for it. When you’re a chef, you have to talk about a certain amount of tolerance for the conditions, for the lack of pay, for working on your holiday, every weekend, sacrificing your personal life for the job. I was like, “yeah, I can do this.” That’s what was the little “ding” moment.
Mentorship and paying your dues as an entrepreneur
Chris: What was the drive? What was the thing that carried you through all of the hardship that’s related to learning the craft and then being able to work under the conditions and all that kind of stuff? What’s the thing that’s the common red thread that kept you going?
Aarón: It’s interesting because I was part of the last generation of chefs before the celebrity chef craze that happened. Before chefs started blowing up on television, we were doing it because we really loved it and we were passionate about it. And then the TV came right when I was getting started, and it allowed us to really be more visible, let people get to know who we are through our food.
The common thread, to answer your question, is you got to be a little bit crazy. You have to work well with others. I think that’s a really big part of the job, and then you have to be open for criticism and have your craft be criticized and exposed.
That’s why a lot of times when you go to restaurants, and I don’t allow people to do this at our places, they say “Is everything OK?” That’s such a telling phrase because it’s like you’re almost not certain about what you’re doing. That’s why I tell our staff, I go, “You never ask that question because we know our [stuff’s] good.”
Aarón: All the time we put the time into it.
Aarón: Those kinds of things are really important, and I think those are some of just the threads I can think of off the top of my head.
Chris: Yeah, that’s really good. I love the artist part of that, and your having a point of view on the artistry of not only being an entrepreneur, but really the food being the focal point.
I will say, one of the things that I found awesome about restaurateurs is that they find beauty in things that are unexpected, and I think that it’s one of the most interesting self-expressions of their art. At the same time, there’s this juxtaposition of it being a business.
Aarón: It’s such an interesting way that you say that because most artists are good at another facet of art. A lot of my chef buddies are good musicians, or they paint, or they’re writers and you can’t just be happy with one facet of art because they influence each other.
Chefs have been taken advantage of as business owners and entrepreneurs for many, many years. I’ll give you an example. A lot of times what will happen is, say you’re going to open a restaurant and then you have a business partner who’s “the money guy.”
They’ll come in there with the initial investment, and they’ll hire the chef, and they’ll give you equity, but it’s like phantom equity. It’s like, “OK, well, we’ll give you 5% off of sales, but we have to recoup the $2 million that we actually put into the restaurant before you see any profit or any profit sharing.”
What ends up happening is the chef goes in there, busts his ass off, trains the staff, develops recipes, does all of that, and then somewhere around the way, they’re crunching numbers and figures. “Well the chef’s making too much money. We have to 86 him, I’ll hire some other guys, some low-brow skill-level dudes to execute the menu, and then the chef’s knocked out of there.” And that happens a lot.
What I would say with chefs, with young chefs especially, is you have to have a good grasp on every facet of the restaurant. The traditional definition of a general manager would be to touch every aspect of the restaurant.
You would work in the kitchen, you would do the administrative work, you would pay bills, you would help with the construction of the place. That’s really what that term would mean in the traditional sense. Chefs always just focus on one part instead of getting involved with the business side of things.
Chris: And that doesn’t come easy to everybody, right?
Chris: You’ve got to put the work in.
Chris: You just said two things that I’d like to understand a little bit better. You’re like, “I don’t like bosses.”
Chris: And, “I have to be open to criticism.”
Chris: Talk to us about what is the story of how you came to the conclusion of “I don’t like bosses”?
Aarón: I don’t know. You know what it is? It’s funny because my mom always says there’s a great word in Spanish that’s called amansado, and para amansar something is to season it, to break it in.
My mom grew up in a cattle ranch, so she had horses. When you have a wild horse that you can’t put a damn saddle on, we have to amansarlo, we have to break him in.
The same thing applies for a cast iron skillet, or a mortar and pestle. You have to break that in to get it to a point where it’s good to use. So, I’m like that horse, I don’t like a saddle put on me. I’ve just been that way since I was young because I always feel like I’m going to outwork everybody, and what I do is so unique and so different from everybody else that how can someone else tell me how to navigate that?
I’ve always been like that. That’s what actually drove me to work really hard because I needed to have my own environment where I can create. That was really important for me early on.
And I take a lot of pride, talking about the criticism part, I take a lot of pride. I’ve only been fired once, and I promised myself when that happened, I said, “I’m never going to put myself in that position again.”
Because I was over my head and I took a chef job way too young and I made the mistake. Now I see a lot of people that I work with on our teams trying to accelerate the process too fast. I’m always telling them, “Pump the brakes a little bit. I promise your time will come.”
Chris: That’s powerful.
Chris: I think something else that has been really, I’d say interesting about just getting to know you in the little bits of conversation that we’ve had, and obviously being on TV, where did all of the gusto or the confidence come from?
You were like, “Hey, this thing’s always been with me the whole time.” But what were some of the things that were like: where did that come from? What were the influences that happened in your life that gave you that, “You know what, I’m good. I’m good enough and I’m going to give this a shot.” And being able to receive feedback. Where did that come from?
Aarón: That’s a good point. My mom probably would be the biggest influence. My mom always did this great job saying, “You’re beautiful, you’re so handsome, you’re so talented.” And I’m a huge boxing fan. If you ever saw Mike Tyson’s story and how Cus D’Amato was his mentor in life. Cus would tell Mike all the time, “You’re great, you’re beautiful, you’re strong. You’re going to be a champ one day.”
Once you start hearing that over and over and over again, you start believing it, and you feel you’re invincible, and you feel that the confidence that you portray every day is unbreakable. That’s kind of how it was with my mom because she just constantly reinforced that upon me, especially because I was sort of like the prodigal kid. I was kind of heir to the throne, so to speak.
Also, a big part of it too, has to do with my culture. See, in Latin culture, Mexican culture, if my father had a business, for instance, it’d be very logical for me to follow in his footsteps and be the guy that’s going to take on the mantle and keep the business going, which happens all the time in Latin culture.
But since my mom is the entrepreneur and the breadwinner, I, as a man, had to step away from her shadow and develop my own style so I could stand alone. That’s why I didn’t want to work with my mom initially, and that’s why I didn’t tackle Mexican food initially.
My restaurants were more than Nuevo Latino, or New Latin, because I felt like I didn’t know enough about Mexican food to really do it justice and cook that on a daily basis. Finally, after years of experience and travel, and getting to know the food intimately, I felt the confidence to execute it right.
Chris: Yeah. Well, you’ve talked to us a lot the past few minutes about the heart and where that’s really come from.
But let’s talk about the craft. What were your culinary influences, and what was the journey to get to Mestizo? The first restaurant.
Aarón: For me, it’s interesting because I was not trained in the very traditional sense in French kitchens. A lot of my chef colleagues and peers made the pilgrimage to France, and were being screamed at by some French dude for three years, and interning at these Michelin-star restaurants, and doing all of that. That wasn’t my trajectory.
I just knew from an early age, it has to do with my culture and being Mexican. We don’t like to be talked to. Our culture is about respect, it’s about pride, it’s about heritage, so I knew that I was not going to react well if somebody was going to call me [names] because I didn’t cook the vegetables the right way.
Chris: And then there’s Gordon Ramsay.
Aarón: And there’s Gordon Ramsay.
Chris: We can get there.
Aarón: Yeah, we’ll get there eventually. But he’s a whole different thing.
My culinary influences were people like Mark Miller, kind of the godfather of Southwestern cuisine, Douglas Rodriguez who was sort of the father of New Latin cuisine, Jonathan Waxman, California kind of Mediterranean love.
I had some really kind of off-kilter mentors, obviously Paul Prudhomme, that really influenced me in many different ways. I tell people all this time, especially my kids, my scholarship recipients, I say, “You cannot just have one mentor, and your parents can’t be your mentor, necessarily.” Remember the campaign with Charles Barkley? He goes, “I’m not your role model. Your parents are.”
I always feel like you should have many different mentors, especially being an entrepreneur and a business owner, you should really have mentors that teach you different things, and sort of impart a foundation in you that is unique because then you’re not just regurgitating what they taught you.
Chris: Yeah. Thinking of mentorship, one of the things that I say about a mentor is they make time for you.
Chris: They’ve got something special, and they make time for you. But the other thing that a mentor does is they end up getting something from the relationship too.
Chris: Talk to us a little bit about how you view mentorship, people you take under your wing, and maybe some of the key lessons that you got from some of your mentors.
Aarón: That’s a great way of saying it. I think to add on that, I think one way that we mentors let our people down sometimes is if we don’t follow through. We’re very much invested in the beginning and the creation of this person and helping this person flourish, and then sometimes we don’t do a good enough job of watching as they grow down the road a little bit.
I’m constantly trying to get better at that. I’ve been giving scholarships out since 2017. My first crop, I don’t even know the last time... I should be calling them at least once a month and be like, “Hey man, what’s going on? Talk to me about your career path. What have you been up to?” Those kinds of things.
I think a mentor has to be able to continue with the flow. But I knew early on that I needed to have one mentor help facilitate the next mentor. That’s why I’m like, “Don’t jump from job to job. Whomever you’re working with at that moment, ask them to write a letter or reach out to somebody else that you want to work with. So, then everyone’s in the loop, and you’re leaving on good terms.”
Because the food world is so small and it’s incestuous, and we all know each other, and everyone’s worked for one chef or another. You kind of have to have a good rep that way. The mentors are essential for me. I would not be the man I am without the influence of others. It’s just that important.
Chris: What was something that was a critical moment where you’re like, “I’m stuck.” And a mentor helped you, in some capacity, break a mindset loose or help you even just practically?
What’s one of those sort of hardship moments that you’ve had where either a mentor or just somebody that you respect in your life helped you out and rescued you, maybe?
Aarón: Yeah. Look, in my book, I’m very candid about my struggles with depression, and there were times there was an addiction problem, and just being able to deal well with my father passing and not self-destructing. That’s why being a chef is so important because I’m the kind of guy that if I’m left alone to my devices, I need a mission. I need to have something to do all the time because I’m just that kind of person that has to continue to create all the time.
One of the lessons I got, I mentioned the only time I’ve ever been fired, I remember going to one of my mentors and saying, “What should I do? Should I take a sous-chef job, take a step back, or get back on the saddle and take another chef job? What should I do?”
He gave me a great piece of advice. He says, “Aarón, I was hired and fired for my first three jobs, and now I’m one of the biggest chefs in the world. But what I ended up doing is I took a hard look at myself and said, ’Am I going to let that situation dictate my happiness?’ It’s a circumstantial thing that, whatever reasons, you weren’t meant to be in that environment or in that setting. You cannot let that control you.”
That was one of the biggest “wow” moments. You’re like, “You’re right. Why the hell am I insecure about my ability because somebody else has an opinion of my work?”
Chris: Man, that’s so good.
Aarón: Yeah, you’ve got to have that sort of unbreakable confidence that, “Yeah, I’m going to be alright.”
Chris: Yeah, something like that’s got to center. I think happiness is a choice, and if you use your circumstances as proof that you’re happy, you’re going to be frustrated pretty often because circumstances aren’t always awesome.
Aarón: I remember having this “aha” moment too, where I was like, “My family’s never going to starve. You know why? Because I have these two things right here. My hands. And I have this up here, my knowledge. I will always provide. Because everyone wants to eat great food, everybody wants to be wowed with a meal. I know how to do that. So, I will always be OK. I will always have work, I will always be able to have that beautiful moment with the customer and that dialogue through food. All of those things will always be there for me.” That was something that was special for me.
Opening a restaurant is no small feat
Chris: I definitely want to talk to you about mental health, and stuff like that later. Because I do think that this is something that entrepreneurs face.
I do want to get to, I don’t know, the startup. What was the birth of your first, I’d say, big success restaurant? What’s the story of startup to maybe success?
Aarón: That’s a great question. I think first of all, a lot of young people don’t know how to open their own restaurant. I’m always telling people I think we should do just a short video of just how to go about it.
Because I think a lot of times, if you’re a sous-chef, for instance, and you work with some great chefs and you feel you’re ready to go out on your own and do it, how do you fundraise? What’s the right square footage you need? What does a good-looking lease look like? All these small things. How much staff am I going to need? How much operating capital do I need to have the bank? All these things that are so important to figure out. That’s why having a good partner and then also educating yourself really helps.
I guess the first real success I had was when I opened a small restaurant on the Lower East Side down the street from Katz’s, and it was called Paladar, and I opened it for $75,000. I had 4,000 square feet, and my rent was $4,000 a month. Imagine.
Chris: Oh my goodness.
Aarón: I was able to get 80 seats in there, but with a tiny kitchen. I cooked every day. I went to the farmer’s market, got food ingredients, brought them back, did a chalkboard menu, really grassroots. Me and four Mexican guys just kicking butt every day.
This is right when the internet was kind of coming out, like 1999, and I remember just, we lived for getting write-ups in Time Out, in New York Magazine, in the [New York] Times. I remember we got a really great review from Hal Rubenstein, who used to write for the New York Magazine, and we also got chosen as the best place to have a party of eight with no reservations, because we didn’t take reservations.
We would be four deep at the bar. I mean, we were packed all the time, and people wanted to taste my food. That was my baby. That was the place where I made my debut.
We were very popular, we were busy all the time, I would turn the place into a little DJ situation on Fridays and Saturdays. From there, I parlayed that into opening up another restaurant downtown in Tribeca called Centrico. I had Paladar for 15 years, and then Centrico, I had for 13.
It’s hard. New York City’s very tough, and I guess Paladar and Centrico, the combination of both those restaurants really sort of established me and gave me the credibility as a chef, which you absolutely need.
Now we’re living in the era with these self-anointed experts because they’re – I call them internet chefs or social media chefs.
Chris: YouTube, dude.
Aarón: Yeah. It’s like “Who the hell says your chicken soup’s the best?” I need authority telling me that.
Chris: For sure. Somebody who’s tasted some.
Chris: I promise it’s good, it’s just sitting here in my kitchen.
Aarón: Exactly. Because I have a nice apron on. Stuff like that.
Because that was something that was sincere. That restaurant for me, was everything. I had my engagement party there, I had countless events and really special dinners there with people that I really love, and that’s why sometimes people get very emotional about a restaurant and letting it go.
I always try to say, you can’t really get emotional about space or business sometimes. That took me a long time to figure it out. When we closed Paladar, I was really beat up about it for a while.
Gaining business savvy and the lifecycle of a restaurant
Chris: I’m sure. One of the things that I’ve been really interested to talk about, with someone of your caliber, is the life cycle of a restaurant. Because you think about it, not every concept is a success, and there’s different reasons that certain things kind of break down.
Not everything turns into a chain, you know what I mean? Not everything goes that way. What’s sort of the life cycle, and some lessons along the way to that restaurant?
Aarón: First of all, you’re the chef, you should be the majority owner. You should have 51% of your business. That’s just to start.
And if you can purchase the building, the real estate that your restaurant’s in, that’s the goal. For every person that’s listening to this, there’s a chef that wants to have their own place, own the real estate if you can. Because that is essential.
If you don’t have the resources to do that, try to get a 15-year lease, and I’m going to tell you why. Because normally, let’s just say you have a 5,000 square foot restaurant that has 80 seats, and your rent’s $11,000 or whatever it is, you make an investment of $2 million to build it out, including operating capital.
Once you have that, you kind of average three to five years to pay that back the initial investment. That five years is kind of a wash, but then you have 10 more years of actually making money. That’s why that 15-year lease—
Chris: That’s why that anchor matters.
Aarón: Yeah, that 15-year lease is really essential because then, if you average that time of recouping the investment, then you can have all that gravy afterwards.
Chris: Yeah, yeah. Do you have provisions that you can negotiate in the lease? Because you were talking about a good lease, you got 15 years of a commitment. Do you have any ways to get out of that or any related advice?
Aarón: Yeah, absolutely. Here’s a couple different things. I’m going to tell you how easy it was when I first opened. I took cash, by the way, for the first five years of Paladar. Which, try doing that now, you know what I mean? My fish guy loved me because I just hit him with $3,000. The vegetable guy, I gave him $2,000 cash every week.
But it was as simple as all the money that we made on Friday nights, we used on payroll, and then Saturday night, we used that to pay rent, the earnings. All the rest of it was just to pay upkeep, and then other purveyors, and insurance, and all the other stuff.
But it was that simple, the math. The 15-year lease is essential, and then I also have the provision in my contracts where if we go under a certain amount of sales per year, we can get out of the lease. If my restaurant does less than $3 million a year, then I can get out. Those provisions can be made.
Chris: Is there a breakup fee, or something like that that you guys got to do?
Aarón: Yeah, sometimes. I’ve known chefs that go into business with the owner of the building and they’re partners in it, that works sometimes.
For me, it’s important to just look at the liability, who’s responsible for the upkeep of the space. If I’m investing in the space and I don’t own it per se, then you’ve got to make those decisions.
Chris: Land ownership changes too.
Chris: And expectations change when that happens.
Aarón: Yeah. But I’ve done stuff like this where I’ve said to my landlord, I said, “Look, I’ll invest in getting new banquettes, I’ll redo the floor, I’ll redo the ceiling, but you just can’t raise the rent on me, or give me six months off of rent.” There’s ways of doing that.
Chris: Do you put tenant improvements in there as well, where they’ll front you some cash, or you’ll bring your own cash, and then they’ll give you some tenant improvements for some TI or something like that?
Aarón: Yeah, the TI is always important. And then all the key money, FF&E (furniture, fixtures, and equipment). I always say that the key money is probably the better move for a young person starting out. Meaning you’re going to come in there, it’s a fledgling restaurant, they have a 10-year lease, they only made it through a year.
Give them $200,000 dollars in cash for everything as it is, and then you assume the lease. Not the debt, but the lease. And then you start a new LLC and you just take over the operations for your own. That’s what I would suggest if you were young starting out.
Chris: Yeah. You don’t want to assume the liability of the existing company. You’re going to start your own LLC and you’re going to get their assets. It’s an asset sale.
Chris: And it’s an assumed asset sale.
Chris: OK, that’s awesome.
Chris: That’s awesome. How do you find deals like that?
Aarón: That’s a good question. What I’m doing now, just because I’m in a different stage in my life and my career. I say this every year, I’m like, “...I’m not going to open another damn restaurant.” OK, what do we do? We’ll open up two.
Now, I’m chasing what you call licensing deals. But just to answer your question, how do you find those? When I go see a landlord or I go to a restaurant that I like a lot, and it’s very successful, I ask: “Who’s the landlord?” Ideally, you want to get in business with a person that has multiple spaces.
Why is that important? Because if you have a good relationship and good results with that landlord, and you’re making money, and you’re raising his property value up, chances are they’re going to offer you one of his other spaces that he has. That way, you can grow with somebody, and then they have your best interest in mind, and their own, honestly.
Chris: And they know you’ll perform.
Aarón: Yeah. The way you find those deals out there is you have to kind of just engage different landowners, and maybe go with some people that have existing operating places that are doing well and find out behind it.
Chris: And your reputation matters as well, right?
Chris: You have to be able to show, “Hey, here’s my P&L, my balance sheet, and I know how to do this.”
Aarón: Yeah, and I’ve gotten really good at understanding what deals to chase. Now, the deals that I really go after now are licensing deals because I have a big name now. These are deals that we chase. Joe Bastianich, one of my good friends, a great entrepreneur, just told me about this deal that he chased.
You give me a quarter of a million dollars to come in, you get my name, you get it for five years, that money’s guaranteed, or 5% to 6% off the top of sales, whichever number’s bigger. So, you’re guaranteed that money, and then I come in two weeks before opening, two weeks after. Then I make quarterly visits, and then quarterly menu changes.
But I put in my people in the restaurant, and our people will be in there operating that. If you get four of those deals, that’s a million dollars to your company that you use that money to go pay a corporate chef, go use that to have somebody, an operations manager. That’s how we grow. We take those licensing deals, and then we fuel our company.
Chris: They’re leveraging your personal brand and all that kind of stuff, and they’re fronting a lot of the costs, and all you’re doing is bringing the value of the brand.
Aarón: And then we operate. Sometimes, there’s deals where I’ll come in there, and I’ll just give them the creative part of it, and then they run it. But I have to trust in their ability to do that.
The other thing, we talked about TI, the one thing now that is super, super important is the IP, intellectual property. That is, if you’re a chef and you’re listening to this and you’re an entrepreneur, you have to figure out who owns the IP and what you do.
Because I didn’t know that. This epiphany came to me three years ago. Someone was like, “Dude, what’s up with your IP?” I go, “What?” My recipes, my brand, the design of my logos, everything that I have. Because a lot of times chefs and creative people get shortchanged on the IP.
Chris: For recipes and the way you plate, what do you do mean? Are we talking trademarks or copyrights? How do you formalize?
Aarón: Yeah, you have to formalize that. Meaning your recipes, your logos, your concept. If you have a deck, for instance, when you come in there, and you say, “This is some of the examples that I want to put into my restaurant as far as fixtures and materials and countertops.” Things like that that you put in the deck, you can copyright that.
Aarón: You can get that through a lawyer, so that’s what I would suggest you do. And then all the recipes that you’re going to give forward, you should also have that documented in a document, whomever you’re working with.
You’d have an operating agreement or a contract, and then also to augment that, you would have an IP document that would also be signed. And that’s how I do it.
Chris: So, it’s an IP document, OK.
Aarón: An IP document, yeah.
Chris: And so before, if you’re going in there to talk to investors or whatever, are you signing NDAs or they’re signing NDAs before you present those things?
Chris: Especially new concepts.
Aarón: But talking about this and being an entrepreneur, I’m going to tell you the deal I’m changing, the ultimate deal.
Aarón: I want everyone hopefully to listen to this, because maybe this would be something that you can kind of work towards. You have to work towards something and have somebody that you want what they have.
In my case, it’s Gordon. I want to have what Gordon has. I don’t want to be as famous as he is because it’s uncomfortable how famous he is. He can’t go anywhere, he can’t. I don’t want that, but I love—
Chris: The amount of cameos that guy plays, as well, is ridiculous.
Aarón: We go out socially, he has to have a security guard, two guards with him, and it’s like-
Chris: Who wants to do that?
Aarón: Who wants that? But I love the way his company’s structured. I love how he’s legitimized him as a chef, then an entrepreneur, and then a TV person. He’s done a fantastic job of having legitimacy in who he is and in his brand.
The end up goal is kind of what Emeril did, too. But Emeril, he’s one of my best friends, I think Emeril pulled the trigger a little too soon. But basically, Martha Stewart’s company, I forgot what it’s called, but then they got bought by somebody else.
They said, “OK Emeril, we’re going to buy your brand for $50 million. But all your pots, your books, TV appearances, all of that, we assume that. You keep your restaurants, but we own your ass a little bit.” But you have to amass all of that over a period of time.
Eventually, that’s what I would like to have happen. I want somebody to come in there, take some of my philanthropy, take that, my books, and the product line. I’m a co-producer and developer of Cocina, which is a digital platform producing Latin content, you can get all of that, but you’ve got to pay me and I keep the restaurants. That’s what we’re working towards.
Chris: But the thing that they’re buying, because this is the point you’re making, the thing that is being purchased is the intellectual property, but the artifacts are all of the documents that you just said.
Chris: Because there’s the essence of it. So people know your name, and the whole, what people call brand, and the intellectual property there. But what they’re buying are those artifacts. That’s why it’s important to document.
Aarón: Yeah. And also, that’s going to be acquired by a hedge fund or an investment capital—
Chris: Private equity, something like that.
Aarón: Private equity, whatever that is. But you also, I think this is important too, as you’re amassing all of that, those articles that you said, you got to document its performance.
You got to say, “I sold this many books. My product line is in Lowe’s, Target, and Walmart.” You back it up with facts in performance.
Chris: Yeah, they’re buying revenue.
Aarón: Yeah, exactly.
Chris: Right, yeah.
Aarón: They want to see that.
Being willing to experiment and try new things
Chris: Talk to us about Johnny Sanchez. Because that’s a big one. Up until now, what’s the arc of the Johnny Sánchez story?
Aarón: Yeah, well it started with a friendship, like most things are. John Besh, who’s kind of the golden boy of Louisiana cuisine and Southern cooking. Obviously, he had a big hiccup, but he and I are avid outdoorsmen. We like to go out in the woods and hunt, and hike, and do all this stuff.
He has a hunting cabin up in Alabama, and we were there having a good time, and what we would do is bring young chefs with us, and it was sort of this rite of passage for them. They’d have to cook for us and be our lackeys, and we would see how they conduct themselves. Do they drink too much? Do they clean up after themselves? Are they cool? Are they keeping their eyes and ears open and learning? Because we’re casing them out.
And then my business partner, my chef named Miles, who’s with me now, his other buddy named Drake, who’s also a chef in Houston, they were younger in their careers and we brought in some, we have a friend of ours who owns a seafood company, and we brought all these beautiful lobsters, and oysters, and crab meat, and all this stuff.
We went out one day and we told the kids, the younger chefs, “All right, we want ‘Iron Chef’ here. We want fireworks on the plate. We’re going to be out for about four hours, and we’ll come back and we expect to see something good.” So, then we come back, we’re tired, we’re hungry, it’s cold, and then these numbnuts literally boiled the lobster and put drawn butter on it, and that was it. I’m like, “What did y’all do here this whole afternoon? You just drank and sat on your ass? What’s up?”
And then me and John, we just took the lobster, broke it up, I made a chipotle cream sauce, we had some cheese and we made this beautiful lobster enchiladas gilded with Louisiana crab meat. I go, “That’s how you do it, bro.” And then me and John go, “...we should do a restaurant, man. Let’s call Johnny Sánchez, bro, your first name, my last name.” “Yeah man, that sounds like a good idea. I’ll take another beer.” It was like that. It happened so matter of fact that and nonchalantly-
Chris: It was born, yeah.
Aarón: And it was born. I can’t tell you how many times people come into the restaurant and we’re busy. They’ll tell me, “I know Johnny.” Talking about me. I’m like, “You sure you know Johnny? OK, buddy. Later.”
Anyway, so it started and the idea being that in Louisiana, people know great food. You could be a movie actor, you can be a musician, people in Louisiana love their chefs. We’re it.
I know that people love very well-seasoned food in Louisiana. They expect big flavor, so the Mexican vernacular sort of works in that way. We wanted to break away from other clichés in Mexican food, and focus on beautiful Louisiana product, but through a Mexican lens.
A lot of people ask me, “Is it like a fusion of Louisiana and Mexico?” I go, “No, no, no, no. It’s a Mexican restaurant that uses Louisiana ingredients as much as we can.” That’s sort of a little bit of the overarching identity of who we are.
It’s been great. I’ve been very proud of how this restaurant has matured. Restaurants tend to get a little stale sometimes, people that are working with you kind of lose interest and focus, you really just spent a lot of time teaching there.
I grew up in New York and cooked there, and I’ve worked with a lot of Mexican guys that are hard-ass workers and don’t complain, and just do what they’re supposed to do. In Louisiana, we don’t have that workforce, so I’m dealing with a lot of kids that have not worked in restaurants before.
We teach and teach and teach everything. I’ll give you an example, which is very interesting as an entrepreneur and talking about workforce, and how you decide on where to open your businesses. It’s very important.
In Louisiana, there’s Mexicans there, but they work in construction. After [Hurricane] Katrina in 2005, there was a huge influx of Mexicans moving from Texas and Northern Mexico to help with the rebuilding of the city because it was damaged, it was destroyed.
A lot of that workforce stayed and continued to work in construction. But how the hell am I going to compete with a line of work that you come in at 6 a.m. in the morning, you’re done at 2:30, you get paid double what I would pay, and then you get to pick up your kids at school at 3? Mexicans are very family oriented. That’s why, and I started thinking about it, I’m like, “How come I can’t get these kids to work with me?” I started doing some research, and that’s one of the reasons why.
Chris: That’s an “aha” moment.
Forecasting trends and heeding customer expectations
Aarón: Yeah, and it is. It’s a lot of teaching, and that sort of brings me to the idea of what is the future of the restaurant business? What are the expectations of the customers? Are people wanting things a little more dumbed down? Are they wanting things a little bit more out there and more creative? We’re living in the era of the foodie, right?
I think the expectations are a lot higher now, to be honest. But from an execution standpoint, it’s so hard for us as operators. I’ll give you a reason why. If I give a cook a recipe that has four ingredients, trust me, they’ll find a way to [mess] it up. They will find a way. And it’s simple, I’ll give you the portion, put it in the bowl, and whisk. Somehow, it doesn’t come out.
A lot of chefs are working with co-packers. Basically, you’ll have somebody execute your recipe in bulk and then they ship it to you. Salsas, side dishes.
That way there’s a consistency of the product and all they have to do is execute the actual dish. That helps for consistency, helps for labor, it helps for a lot of things. That’s a thing I’m seeing a big movement towards the co-packing and chefs working with other people.
Chris: Talk to us about that. Co-packing as it relates to consistency is really big, and then it gives you some elasticity because you don’t have to carry the employee expense, the overhead of all of that, to keep them employed. It’s like pay for what you use, pay for what you need, even though you have commitments, right?
Chris: As you got into co-packing and giving that a shot, what are some of the things that you discovered or maybe some of the challenges?
Aarón: Yeah, it’s great. Just trying to figure out what can be done in bulk, and how to keep it vibrant and fresh. The co-packer that we work with in New Orleans actually does all the side dishes for Ruth Chris. You know that Ruth Chris is a New Orleans brand, it was started there.
Chris: I didn’t know that.
Aarón: It started there. When you go and you get the cream spinach or the damn hash- All that’s co-packed. All that’s made ahead of time and hopefully I’m not disappointing people, but it happens more than you know.
But through that process, I started to figure out and looking at our menu and the breakdown of it, what can be co-packed and what cannot absolutely not be co-packed? We formed a list, and we tasted the product that was made for us and then the way we make it, and we did that exercise for a couple months just to figure out if we liked it the way it is.
I would say if we put forward 40 items, I think maybe 30 of them were good, 10 were misses or flops. That’s kind of how we go about it, especially where we go and we expand, and then understanding the lack of sophistication from the cook’s standpoint. We have to make those decisions.
That’s how you develop a menu that can be executed for a customer base in a workforce that makes sense. You can’t force a certain kind of food in a market that’s not going to work. There are a lot of true entrepreneurs and chefs, they fall on their sword because they’re just so uncompromising.
Chris: Yeah, they’re committed to their thing rather than listening and paying attention.
Aarón: Yes, exactly.
Chris: Something you said earlier, which I love, it’s like the classic Michael Gerber E-Myth. A lot of, let’s just say chefs could be, and people face this, and it isn’t just chefs, entrepreneurs, period. They are often technicians having entrepreneurial seizures.
One of the things that I think is really, really interesting about what you’re talking about is the choice of co-packing. That is working on the business choice.
How do you get to that moment? Think about it like this, and I know you’re going to articulate this better than I will, but you’re in the business making the food. You got to get the ingredients and things like that, and you’re in the business to do that, to pause and then say, “You know what? I’m going to work on the business for a second, I’m going to choose co-packing and to pursue that.”
What is some of the advice or some of the learnings that you have to get to that choice to make that type of decision?
Aarón: Exactly. Well, like I said before, a little bit is the idea of understanding where you are in the market and who your customer base is. It’s interesting because with Mexican food, it’s like Chinese food. It’s a food that people have very strong opinions about, and they feel like they know it.
We’re always having this constant battle of, “OK, what is authentic Mexican food to you? How far do you want to take it?” To make those decisions, you have to really think to yourself, “What sells?”
I’ll give you an example. I fought tooth and nail with my partners about queso dip. Because queso dip is a gringo thing. No offense, but it’s a gringo thing. You don’t find queso dip in Mexico.
You have a queso fundido, but you don’t have a queso dip. And then they’re like, “We got to have a queso dip, we got to have a queso dip.” And I’m like, “Let’s put a queso dip on there.”
Chris: Do we? Do we really?
Aarón: Do we need it? And then, “Let’s do queso dip.” Ends up being hands down, the best seller we’ve ever had.
Chris: No way.
Aarón: And we co-pack it. Winn-Dixie, a huge chain, wanted us to sell them the damn queso dip and have it available. That’s how good it is. That’s an example where you just have to say, “You know what? Be compromising, listen to your customer and just go forward.”
Chris: That’s a big decision, that’s awesome.
Understanding your costs to make accurate projections
Aarón: And the food cost is obviously great on it too. Just to answer your questions, so we don’t get off track a little bit. How do you make that decision to go co-packing?
It has to deal with, for me personally, the quality of cook, what market I’m in, and the genesis of what’s being co-packed. Am I doing a soup, or am I doing a purée, or whatever that is? But it has to have the essence of your flavor in it for me to make that decision.
The interesting thing is that you factor in co-packing like you would factor in any other cost. Ideally, a dish should have a 25% food cost in order to be profitable as an item. You might be able to take it to 30%, depending if it’s a ribeye or something that’s a high-cost item.
But ideally you want to keep your cost there, your labor what, 14, somewhere around there, and then that’s kind of how you navigate that. You want your breakdown to maybe be 60% food, 40% booze sometimes. Sometimes I’ve seen it flipped, but understanding how the cost works and what the expectation is so important as an entrepreneur. Know what makes sense.
Chris: What you’re just talking about is, if my benchmark food cost is 25% and then I’ve got another, let’s just call it 15% on labor, and then you’ve got co-packing and they’re only doing a portion of that, right?
Chris: There’s some math that you’re going to need to do to really evaluate your margins and your cost of goods sold. Because what you’re saving, the big thing you’re saving on is if you can negotiate and bulk with the co-packer, and then at the same time you can manage some of the food prep, all of the employee and labor, and things like that.
I think that right there is a challenging one to evaluate. The analytics to be able to do that, how much of that is gut and back of the envelope math and how much is that, I’m in a spreadsheet and I have somebody managing those analytics?
Aarón: That’s a great question. For me, I know off the top of my head what beef costs. I know how to structure a menu where I know I’m going to make money off the quesadillas because that’s a 10% food cost item, and it’s going to balance out because my ribeye is a 32% cost item.
You have to structure your menu where some items are going to be just really home runs and you’re going to make money on, and there’s some that you’re going to just have to come to an understanding that you’re going to break even or even lose money.
If you have the right set up on your menu, you will be successful. That’s really important. The math that I always utilize is 50% labor, 25% food cost, and understanding how much staff you need to execute, I think, is important. How many salaried employees do you have versus hourly employees? All that kind of stuff is so important in a restaurant.
Chris: It sounds like you definitely know your benchmarks, you understand what those costs are, and probably there’s some moments where they surprise you. But I think a good connection to expansion, adding locations, adding other concepts – co-packing lets you do those things.
Aarón: Unless you have different styles of restaurant. I can now have a quick service, a QSR, like a grab-and-go concept, which I do have. I can do a proper sit down, Johnny Sánchez, or I can do a taqueria that’s 500 square feet that I’m working off of no hood, just electrical equipment.
There’s so many different ways you can go about it, and co-packing allows you to do that. That’s another way of looking at it. At the end of the day, restaurants are businesses. A lot of times, when you come to a restaurant that does well and has multiple units, I’m always so shocked at how simple their plan of attack is, and their operating practices are.
Chris: Yeah. It’s a hedgehog concept.
Aarón: It is man. It’s like, “Wow, here we are putting all this love, and I’m working with these ladies in Oaxaca to kind of replicate this obscure mole that is only made once a year.” And everyone’s like, “I just want a quesadilla.”
As a chef and as a creator, it’s a kick in the [pants], you know what I mean? But as I’ve gotten older and I’m more experienced in business and as an entrepreneur, I have had to choose my battles, and really keep my eye on what’s important.
I scratch my creative itch in my restaurants by doing special events with other chefs, inviting them in, maybe doing a menu for Día de los Muertos, or for a specific holiday in Mexico, and then we can have fun and be creative, but our menu is pretty straightforward with a lot of classics on it.
Because that’s what people want, and what people expect, and it doesn’t go over their head. You never want a customer to feel out of place or like they’re not knowledgeable about what they’re getting served because a customer wants to feel like they know what time it is. They don’t want to come in there if they feel like, “Oh man, maybe this is a little too cerebral.”
That’s always a decision you have to make as an entrepreneur and as a chef, is what’s going to sell and what’s what makes sense.
Chris: Just an observation in our conversation, something you’ve been able to do is crossing this chasm of starting off as an artist, as a chef, and recognizing the essence of what food does to bring people together, and what it could do to communities, and you have this artistry of it.
One of the things that I think you’ve been able to do, and I like how you called it, scratching your creative itch, you found a way to express yourself creatively in the entrepreneurship side of it. You were able to port some of the artistry attributes into the entrepreneurship side of it, into the concepting and things like that, but you still find a way to feed the artist’s side of you.
I don’t know if a lot of entrepreneurs can really stitch that together. How did you say, “I still am an artist, but I found the artistry in entrepreneurship.” How did you get there?
Aarón: Exactly. I can tell by you, too, you’d probably get excited seeing a P&L sheet sometimes.
Chris: Yeah, we talk about Excel from time to time.
Aarón: Yeah, exactly. I get excited now about looking at a spreadsheet of different costs and knowing that we’ve improved at it. There’s nothing better than the feeling of knowing you got your labor down, or you came in under what your projections were, or having that $50,000 week at your restaurant and that excitement that you have like, “Wow, we’re going in the right direction, we’re managing our costs.” People care.
A lot of times, when restaurants are not productive or successful, it just comes down to not keeping an eye on things. You got to be vigilant with everything with cost, you got to know how many glasses of wine come out of a bottle, man, it’s four. You got to know that that bottle price, what you buy one glass of wine for is what the bottle costs.
You got three glasses of profit per wine bottle. That kind of quick math help will help you a lot. You got to know how many shots you get out of a bottle of booze. All those kinds of little things will help you keep an eye on the costs and allow you to be profitable.
Chris: Yeah, and portion control portion, that’s the big thing to maintain consistent margins.
Aarón: Absolutely. I know if I do 100 lunches and 200 dinners, I know exactly what I’m going to pull in every week. That’s the goal. You have to have benchmarks for business that you want to make and you want to hit.
And then you can come back and say, “Why are we not hitting our numbers? What is preventing us from getting that? Is it a cost situation? Is it because one of the damn conventions in New Orleans was canceled and we were expecting 5,000 people to come into the city and support us?” There’s all those kinds of factors and that way it allows you how to plan properly.