Recipe for Success
Smallsourcing
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Camarena and her father agreed on a yearlong trial period to see if she could run the company. The daughter quickly created a corporate structure, consolidated bank debt, standardized and catalogued recipes, and installed a point of sale software system to track expenses and inventory; profits more than tripled.
"When my father saw the numbers after that first year, he kind of realized that maybe I knew what I was doing," says Camarena, who is unmarried and often works 12- and 14-hour days. She doesn't have a college degree — she intends to pursue one some day — but her vendors say she's a shrewd businesswoman who is obsessed with quality, and, according to one vendor, "knows how to cut a deal."
The U.S. Minority Business Development Agency named Taquerias Arandas Minority Retail Firm of the Year in 2004.
"The old guy doesn't have a son and Judy knew the business, so I guess he gave her a shot," says Trey McHale, a Coca-Cola account manager who has worked with both father and daughter. "Judy's turned it up a notch through an expansion of the brand and maintaining consistency across all the restaurants."
Each taqueria is owned and managed by a member of the extended Camarena family or by former employees. Franchise agreements include a $65,000 fee up front and 6 percent of sales. By contrast, a McDonald's franchise requires an initial investment of $650,000 to $1.6 million, and at least 12.5 percent of sales.
Camarena says her focus now is finding sites for new locations. She has opened 10 restaurants in the past four years and is looking to expand outside of Texas. Moreover, she hopes to attract more non-Hispanic customers via promotional events with TV and radio stations.
One thing Camarena says she does not plan to do: Americanize the menu to draw a wider following. "I'm biased in that I love Mexican culture and food," she says. "I know that if people try it they will like it." She also doesn't want to alienate her core Hispanic base, which she fears would bolt if the food loses its authenticity.
Taquerias Arandas, which is privately held, declined to release sales or any other figures. Tristano, the Technomic restaurant consultant, estimates sales are at least $1 million per restaurant, though he says that number is probably low since the chain, unlike most other fast-food franchises, sells beer.
The company also has four Arandas Bakeries, which specialize in Mexican breads, tortillas, and pastries. They supply both the retail stores and wholesale customers, including Wal-Mart stores in Texas. There are also two Mexican-style seafood restaurants called Ostioneria Arandas Seafood. All the divisions operate under the name Arandas Franchises Inc., which is headquartered in Houston.
Its success will depend on whether the company can sustain its growth in an age of tightening credit for opening new locations, soaring food prices, and stricter immigration enforcement, which has slackened sales. "It has definitely cut into our business," Camarena said. "People are afraid to come out."
Attracting non-Hispanics like Cathy Williams, an account executive with a rock radio station in Houston, will be essential. Williams says she had never heard of Taquerias Arandas before she orchestrated a promotion at one of its locations. Most of the station's target audience who came to the event, Anglo men in their 20s and 30s, had never been there either.
"Everyone was sort of blown away by how good and how incredibly reasonably priced the food was," she says. "It's way better than something like Taco Cabana or Taco Bell."
However, Williams adds that she will continue to go to Taco Cabana when she's in the mood for Mexican fast food because there isn't a Taquerias Arandas near where she lives. Camarena says she's working on it.
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