Russ: This is the BusinessMakers Show heard here and online at thebusinessmakers.com and it's guest time on the show and our topic is one of my favorite foods, Mexican food, because what we've got with us in the studio is the Founder and CEO of Mexican Restaurants, Inc., one of the country's largest Mexican-only publicly held restaurant chains. Guys welcome to The BusinessMakers Show. We have Larry Forehand, Founder. Larry, welcome to the show.

Larry: Thank you, Russ.

Russ: And Curt Glowacki, CEO.

Curt: Thanks Russ.

Russ: You bet. The list of brands in Mexican Restaurants, Inc. is very, very impressive, Casa Ole, Crazy Jose's, Mission Burrito, Monterrey's Little Mexico, and Tortuga Mexican Kitchen. Now I understand from you, Larry, that it all started with Casa Ole?

Larry: That is correct.

Russ: Okay. And you are the Founder of Casa Ole?

Larry: Yes, we opened the first Casa Ole on December 1, 1973 in Pasadena, Texas.

Russ: Wow. December 1, 1973. Well tell us about that. I mean were you an avid chef at some of the cool Mexican dishes or how did this thing come into business?

Larry: Well not really, Russ. I started my career as a lot of people in our industry do as a busboy.

Russ: Wow.

Larry: For Monterrey House –

Russ: Okay –

Larry: And –

Russ: That was a pretty big chain at the time, right?

Larry: That was the only chain at the time.

Russ: Okay, right.

Larry: Yeah, back in the '60s.

Russ: All right.

Larry: And just kinda worked my way up through their organization and ended up at the end of my career with them as their Director of Operations with –

Russ: Wow.

Larry: - 65 locations under my direct control.

Russ: Wow.

Larry: And I went to 'em and asked 'em if I could franchise one of their locations.

Russ: Right.

Larry: They were thinking about going public at the time so they –

Russ: Okay.

Larry: - told me no. So my mentor, Joe Ingram, who was the Director of Operations at Monterreys before I became Director of Operations –

Russ: Right.

Larry: - advised me to go open my own restaurant.

Russ: Wow.

Larry: And so that's what I ended up doing.

Russ: But that's a pretty big step, isn't it, from being a part of a franchised organization where you have all of the processes mapped out and all the branding and all the marketing – to going the other direction and open your own?

Larry: Russ, it really wasn't because of my experience. You know, I worked every position in the restaurant, was a manager, became Director of Personnel. I worked as Director of Operations and opened probably 30 of their restaurants –

Russ: Wow.

Larry: - so it was just duplicating what they had done.

Russ: I got a key question, though, how long were you a busboy?

Larry: About four years. I started when I was 14.

Russ: Okay.

Larry: And when I graduated at the age of 17 I actually become –

Russ: Okay.

Larry: - a manager for the Monterreys down in Baytown, Texas.

Russ: Wow, that is cool. I've heard of other stories like that in the restaurant business that there've been a lot of people that really start at the bottom in that business and figure it out thoroughly and rise to the top. Or is it uncommon?

Larry: No it is not uncommon. There's just a whole lot of people that you can look at – all kinds of chains out there that people, you know, go out and learn how to do the business and get that desire to be their own entrepreneur and open their own restaurant and probably 50 percent of the people that are in the business now have either been a waiter, busboy, dishwasher, some lower job before they actually went out and opened up their own restaurant.

Russ: That's cool. How many restaurants did you have open before you no longer were the top guy?

Larry: Oh, I guess that was back when we went public in 1996 and I think at that time we had 65 Casa Oles open.

Russ: Okay. So you took Casa Ole to about 65 restaurants. It was time to do a public offering and that's when you stepped out of the CEO position?

Larry: That is correct.

Russ: Do you ever regret doing that?

Larry: Not at all.

Russ: Okay.

Larry: You know, I mean fortunately, we had a little bit of a transition problem when we first went public but then Curt Glowacki came in as our CEO and he solved the problems and had done a great, great job. He gets all the headaches and I get all the fun.

Russ: All right. Well that's a perfect segue to you, Curt. I – and I was talking down that line not knowing that you actually followed Larry. So there's only been two CEOs, essentially, in this company from the beginning?

Curt: Well actually Lou Nieb –

Russ: Okay.

Curt: - who's our Non-executive Chairman of the Board was the CEO for a short period of time.

Russ: Okay a short period of time between the two of you?

Curt: Between the two of us.

Russ: Okay. Wow. So here you are now, CEO of this thriving and growing company, although in a tough economic time, right?

Curt: Correct.

Russ: Okay. Well, tell us about your background and what qualified you to come in and take over the helm. Had you been CEO of a publicly-owned restaurant company before?

Curt: No, Russ, I sure wasn't.

Russ: Okay.

Curt: As a matter of fact, my background's a little bit different than Larry's. I grew up in the Pittsburgh area. My father was transferred down to Houston way back in the early '70s. I grew up in Houston and actually went to the University of Houston. Go Cougars!

Russ: Okay, all right.

Curt: And out of the University of Houston I was going to become a lawyer.

Russ: Okay.

Curt: Got accepted to law school and not too many of your listeners, I think, are gonna remember this phrase but my wife and I, the rabbit died.

Russ: Okay.

Curt: And our first son was on his way.

Russ: Ah! Okay. I remember it. So that ruled out law school.

Curt: Correct.

Russ: Okay.

Curt: And at that time, Steak and Ale was very big –

Russ: Oh yeah.

Curt: - in the Southwest.

Russ: Oh yeah.

Curt: I had the fortunate opportunity to work for them for 12 years –

Russ: Yeah.

Curt: -mentor under Norman Brinker, who I think is –

Russ: Oh yeah.

Curt: - I very highly of and God rest his soul he passed away this past year.

Russ: Oh yeah. That's right.

Curt: He absolutely, positively gave me the background and the principals and beliefs on what it takes to run a restaurant.

Russ: Okay. So what was the highest level position that you had held before you came into take a company public as CEO?

Curt: I was the Regional Manager for Steak and Ale.

Russ: Okay.

Curt: And another mentor of Norman Brinker's, Dick Frank, who was the CEO of Chuck E. Cheese –

Russ: Oh yeah.

Curt: - bought Monterrey House out of bankruptcy.

Russ: Okay.

Curt: And he needed some, should we say, "Fool" –

Russ: Okay.

Curt: Because the company was bankrupt and it was doing terrible business and he came and knocked on my door and said, "Glowacki would you be interested in being the Operating Officer of that part of the business?"

Russ: Okay.

Curt: So actually Chuck E. Cheese got diversified and bought a Mexican chain.

Russ: Wow.

Curt: Monterrey House out of bankruptcy and at that time there were 65 units.

Russ: Okay and you were actually head of Monterrey House?

Curt: Correct.

Russ: Okay. Now somewhere Monterrey House ends up becoming part of MRI, correct?

Curt: Correct. We went through a couple other ownership changes. We, at the time, developed Monterrey's Little Mexico or converted the number of the Monterrey houses into Little Mexico. We developed the concept of Tortugas and then Lou Nieb, Larry Forehand and the rest of the Board became interested in our company and there was an acquisition.

Russ: Okay. Very cool.

Curt: And that's how I got onboard.

Russ: Very cool. All right, we're talking with Larry Forehand, the Founder of Casa Ole, which was the beginning of Mexican Restaurants, Inc., and Curt Glowacki, the CEO and we'll be back with more from them after this. You're listening to The BusinessMakers Show, heard here and online at thebusinessmakers.com.

[Aflac Commercial]

Russ: This is the BusinessMakers Show heard here and online at thebusinessmakers.com and continuing on – we're in the restaurant business this morning. Mexican restaurant, because we have the Founder of Case Ole that turned into Mexican Restaurants, Inc. as well as the company's CEO. Now I know that when you were growing Casa Ole, Larry, it seemed like it was sort of a combination of company-owned stores and franchise stores, is that right?

Larry: That is correct.

Russ: Isn't that kind of normal in the restaurant business?

Larry: It is. You know there's some chains out there that they don't do a lot of company-owned stores, they do strictly franchising.

Russ: Right.

Larry: But our philosophy was that we needed to show and we needed to operate our restaurants –

Russ: Right.

Larry: And everything and make them profitable to make sure that we can make the franchisees profitable as well.

Russ: Okay, okay. And Curt do any of these other brands, like Crazy Jose's, Mission Burrito, do any of those have franchises today as well?

Curt: No they don't.

Russ: Oh.

Curt: But Mission Burrito has incredible potential for franchise growth.

Russ: Ah! Okay. When the other four brands were acquired, there weren't even any franchises at the time?

Curt: Correct.

Russ: Okay, to me it seems like it could be a problem sometimes when you're operating both company-owned and franchise stores.

Larry: There can be. You know, we have always had the philosophy that we needed to have company-run stores and to prove out to the franchisees or potential franchisees that we can operate as well as them. We can make a profit as well and give them the guidelines to go by.

Russ: Okay.

Larry: But at the same time, the franchisee is his own entrepreneur –

Russ: Right.

Larry: - and has his opinion, so –

Russ: Right.

Larry: - there's a little conflict but it's very seldom a big problem. We talk through it and we respect our franchisees –

Russ: Okay.

Larry: - and what they know and how they wanna operate and so it's a pretty good match.

Russ: Are you close to any of the franchisees?

Larry: Oh yes. (Laughter) I'm real close and everything.

Russ: Right.

Larry: Most of them grew up as supervisors or general managers or this type of thing in our chain.

Curt: Yeah and I can tell you this that he's really close –

Russ: Yeah.

Curt: - because his brother is one of 'em.

Russ: Oh!

Larry: (Laughter)

Russ: Oh wow! So it's in the family, still.

Larry: As well as I'm a franchisee now.

Russ: You are as well?

Larry: I have two locations here in the Houston area now.

Russ: Wow.

Larry: Yeah.

Russ: Well that's real interesting. But now let me ask you this. When you become a franchisee and so I assume these are Casa Ole franchises, right?

Larry: That is correct.

Russ: Do you have a protected territory or could –

Larry: Yes.

Russ: - the company come and put a store right across the street and –

Larry: They couldn't put another Casa Ole.

Russ: Okay.

Larry: We have a three mile radius from any of our restaurants. Now they can come in, if they wanna put a Mission Burrito in there –

Russ: Oh, could do that?

Larry: But it's something that, you know, we've talked about and possibly if they wanna put a Mission Burrito in there we could be the franchisee for that Mission Burrito.

Russ: Okay. Very interesting. All right, Curt when you brought these other brands in via acquisition, do you start immediately looking at them and implementing some best practices that you learned on this other one how to do the tortillas and these guys don't know it or they have a different machine to do 'em or they have a different system for bringing in help when the volume goes up – do you start trying to do that pretty quickly?

Curt: Yes, you sure do. And part of our vision statement we really wanna be the best in class in terms of the Mexican segment of the hospitality industry and we work real hard at doin' that.

Russ: Okay. I judge most of my experiences in Mexican restaurants based upon Margaritas. Do you guys serve Margaritas in all five of these brands?

Curt: We certainly do.

Russ: Okay.

Curt: And we – I like to think we serve our fair share. The vast majority of them are neighborhood restaurants.

Russ: Right.

Curt: So our liquor mix is fairly low.

Russ: Right, right.

Curt: But Tortuga Coastal Cantina, especially the one in Galveston –

Russ: Right.

Curt: - you go back there, you kick back, take off your shoes and sip a very good Margarita.

Russ: Wow. Okay. Now when I sit in a real happening restaurant and watch it operate, it just blows my mind after you've got, you know, everything tasting great and the things hot that are supposed to be hot and the things cold that are supposed to be cold – just the inventory would drive me nuts, you know, that we're selling all these chalupas tonight and we're about out of 'em, what do you do? Do you go run down the grocery store?

Larry: Hopefully, we don't do that.

Russ: All right.

Larry: I think we've been in business long enough that, you know, we are supplied well enough. We're challenged every now and then when we get an unexpected rush but our people – you will see them the happiest, the busier we are.

Russ: Wow, that's cool.

Larry: Okay, the busier we are, our servers, the back of the house, everybody, they're laughing and having a good time. It's when it gets slow that it gets to be a problem.

Russ: Okay, yeah. But then also the size of the staffs, it blows me away. And it seems like you can't plan on a big crowded evening every night. So you must have processes in place to start callin' in more help and that sort of stuff?

Curt: Well, I been in this business and awful long time and there's a real simple theory. You schedule for the expected and you manage the unexpected.

Russ: Okay.

Curt: And it's worked fairly well for us over the years.

Russ: Okay.

Curt: And you know, part of my job as the CEO is to incorporate a corporate culture that really puts people first and if we do that then all of a sudden the consumer gets taken care of and ultimately, our shareholder'll be taken care of.

Russ: Okay, well I wanna talk about the people a little bit more after this. We're talking with Larry Forehand, Founder of Casa Ole and Curt Glowacki, the CEO of Mexican Restaurants, Inc. You're listening to The BusinessMakers Show, heard here and online at thebusinessmakers.com.

[Aflac Commercial]

Russ: This is the BusinessMakers Show heard here and online at thebusinessmakers.com and continuing on with Curt Glowacki and Larry Forehand of Mexican Restaurants, Inc. Okay right before we left, we were talking about the people part of the business and to me, it seems like it's enormously important to the business but I also know that the pay scales and the way that it works and the incentives being mostly on tips, it seems it would almost create an unloyal employee. In other words, if they just got tired, they're thinkin', "Well, I'm not really – I don't need to go turn in some official resignation letter, I just don't show up." Is that part of the challenge that you guys have experienced?

Larry: Russ, I think it always it but I think Curt has done a great job of instilling the fact that we take care of our people and our people'll take care of us.

Russ: Yeah.

Larry: And our turnover compared to the restaurant industry norm –

Russ: Wow.

Larry: - is a third.

Russ: Wow!

Larry: You know, I mean it's not unexpected to have 300 percent turnover in your hourly employees.

Russ: Right.

Larry: We have maybe 80 percent.

Russ: Right. Wow.

Larry: So, you know, it's just Curt has done just a great job instilling loyalty in our customer –

Russ: Okay.

Larry: - and our employees and he takes care of 'em and they stay around.

Russ: Okay. But you still must be sort of on this perpetual recruiting type thing.

Larry: I think you always are.

Russ: Okay.

Larry: Okay, you're always lookin' for better people, good people and usually when we lose people it's because they've had to relocate or something like that.

Russ: Okay.

Larry: It's not that they're dissatisfied with their job.

Russ: Okay, that must set you guys apart. Well I know for a fact, Curt, that you must sorta sometimes get on people's radar in other restaurant chains that would like a guy that knows what you know.

Curt: Well, back in 2006, I actually had the opportunity.

Russ: Okay.

Curt: Got a phone call back in October of 2006, this young lady was looking for a CEO. It intrigued me because at that point in time, the company was doing exceptionally well. Our stock was trading between $10.00 to $12.00 a share. We were recognized by Fortune 500 Magazine as one of the top 100 fastest-growing small cap companies.

Russ: Right.

Curt: So I said if I'm ever gonna exit, this'll be the time.

Russ: Right, while you're on the top.

Curt: So I was fortunate to get an opportunity from OSI to be the President of Outback Steakhouse.

Russ: Whoa.

Curt: I accepted the glitz and the glamour of Tampa –

Russ: Right, right.

Curt: - to run a $2.6 billion concept and it wasn't too long after that that I realized that my heart wasn't there.

Russ: Wow!

Curt: My heart was in Houston, Texas with my family –

Russ: Right.

Curt: - as well as my MRI family.

Russ: Wow.

Curt: And I don't know how many other Boards in this country would have analyzed both offers that I got before I exited and gave me their advice and then were kind enough to bring me back when I realized I had a brain cramp.

Russ: Wow. So you left for a while, took this other mission at a bigger, larger, position and decided it was a mistake and they took you back here, right?

Curt: They certainly did.

Russ: Wow.

Curt: And I can't say enough things about the OSI organization.

Russ: Oh yeah.

Curt: I mean they have a lot of the same corporate culture, principals and beliefs that we've instilled in MRI.

Russ: Well that's right and we've had Chris Sullivan on the show too, before – one of the Founders and former CEOs of the company. Definitely a first-class company but boy that says somethin'. You came back. Okay. Well tell us what's in store for the future, guys. I know it's challenging times in the economy. What does it look like for the future for MRI?

Curt: Well, the future for the restaurant industry as a whole across the country – the National Restaurant Association feels like there's gonna be about 12,000 restaurants close down this year.

Russ: Twelve thousand?

Curt: Twelve thousand across the country.

Russ: My goodness. Yeah.

Curt: So, we are going to have to shift our paradigm and make sure that we're a lot better than the person down the street.

Russ: Right.

Curt: And we've initiated a program that's reenergizing our employees.

Russ: Okay.

Curt: Really giving the consumer the hospitality they're looking for.

Russ: Okay.

Curt: And we wanna separate ourselves in differentiate ourselves by the total experience that we give the consumer.

Russ: Okay, sounds like a good plan but probably will be challenging.

Curt: It certainly will be.

Russ: Okay.

Curt: We've had our challenges this past year.

Russ: Okay, well like everybody , I think. All right. Guys, I really appreciate you coming in and sharing the story of MRI with us.

Larry: Thank you, Russ.

Curt: Thanks, Russ.

Russ: You bet. That's Curt Glowacki, CEO and Larry Forehand, Founder, of Mexican Restaurants, Inc. and you're listening to The BusinessMakers Show, heard here and online at thebusinessmakers.com.