Case Study: Adding a New Restaurant in the Shadow of the First

THE CHALLENGE To expand to a new location while surviving a disruptive public works project — a light rail line down the middle of Red Iguana’s street — just as the restaurant was experiencing a rush of business from being featured on the Food Network’s “Diners, Drive-ins and Dives.”

THE BACKGROUND In 1965, Ramón and María Cardenas moved from the San Francisco Bay Area, where they were working in a restaurant, to Salt Lake City, where they took over a restaurant called Casa Grande. Their decision to not modify María’s recipes from Chihuahua for the American palate may have slowed growth at first. “People were not used to their kind of Mexican food,” said their daughter, Lucy. In the first years, annual revenue was about $25,000, but María and Ramón gradually built a following.

In 1970, they moved Casa Grande downtown. Revenue continued to grow until urban decay and a recession hit in the early 1980s. By 1984, Ramón was forced to take a cooking job in Park City to make ends meet, while Maria ran Casa Grande. In 1985, Ramón returned to open a four-table restaurant called Red Iguana in Salt Lake City’s working-class west side. The restaurant did so well — it pulled in some $300,000 in its first year — that María was able to close the ailing Casa Grande. After a fire burned down the new restaurant in June 1986, Ramón reopened 10 blocks away at the current location.

Brightly colored with floral tablecloths, the reasonably priced Red Iguana developed a cultlike following. Its revenue grew every year, hitting $1.9 million in 2003. But in 1998, María grew ill and required Ramón’s full-time care, which forced Lucy to make regular visits from Portland, Ore., to oversee the business. After María passed away in 2002 and Lucy’s brother died of a brain aneurysm in 2004, Ramón decided to sell. “He was exhausted and ready to throw in the towel,” said Lucy’s husband, Bill Coker.

It was a delicate moment: Lucy and Mr. Coker wanted to take over the business, but they had to convince Ramón to look past his strict views of gender and family. “Because he was a son, a man, my father would have given my brother the business,” Lucy said. “But we bought it from my dad. We got lawyers and accountants involved.” Plus, she added, “he wanted to sell the business to me, not me and my husband, because it’s family. It was at times painful.”

After paying Ramón $560,000 for the company in 2005, Ms. Cardenas and Mr. Coker sped up an incipient modernization drive, improving the electrical system and buying the parking lot next door. Ms. Cardenas, who had worked as a wait staff trainer at various Hard Rock Cafes, had already brought in a computer system, which had helped professionalize the staff. “I wanted to turn it into full service, not, ‘Wham, bam, here you go, here’s your check,’ like in a diner,” she said. To improve food quality and consistency, she had her father cook each dish in front of her chefs so they could write down the recipes, which they had never done before for fear of recipe theft. Revenue increased to $2.7 million in 2006 and $3.8 million in 2008.

In 2008, the “Diners, Drive-ins and Dives” appearance and news of the coming light rail project changed the business’s direction irrevocably. Scheduled to start in 2010, the multiyear project had the potential to dissuade customers from visiting and, during its most intense periods, to close the restaurant — a huge loss for a one-location business that had been serving 700 people a day, 363 days a year.

THE OPTIONS When Mr. Coker saw the lines outside his restaurant, he thought of Sammy Davis Jr. Mr. Coker, 63, had spent 37 years in the entertainment business, and in the early 1980s he had worked as an assistant director and production manager on a series of Burt Reynolds buddy comedies. On “The Cannonball Run,” Mr. Coker had worked with Mr. Davis, Dean Martin and Roger Moore, stars who had become so popular, he believed, that they had lost their identity. While driving Red Iguana’s branded van around town, he began to hear from locals who had stopped coming to the restaurant because of the long wait and out-of-state crowds. “My experience in the entertainment industry taught me that that kind of popularity can flip and become a negative,” Mr. Coker said, “and once it becomes a negative you become Planet Hollywood.”

Article source: http://feeds.nytimes.com/click.phdo?i=3dcb15f5ed9a780335d3febe9f0dec2a