Russ: This is the BusinessMakers Show heard here and seen online at theBusinessMakers.com. It's guest time, and our topic is the entertainment business and restaurant business, because my guest is Bob Borochoff. Bob, welcome to the BusinessMakers Show.
Bob: Thanks, Russ.
Russ: Well, let's start by you telling our audience what you're doing these days.
Bob: Well, my family and myself made an investment a few years ago and bought a large interest in Café Adobe, and I'm the CEO, running that company and expanding it.
Russ: All right. For our listeners outside of Houston, Café Adobe is a very successful, Houston-based restaurant chain, because now you have four or five?
Bob: We have four. We sold the fifth one right after we opened our brand new one last year.
Russ: Cool. It's a very fun and exciting, festive Tex-Mex restaurant. I have to compliment you on this. It's kind of interesting to me with the restaurant business people that we've had here on the show before, it's a tough business. It seems like it's a tough business to keep operating profitably. To go in and make a big investment and start operating, you must have had confidence that you had a long-term play here and an ability to get a real strong bottom line.
Bob: Without question. I opened the first restaurant that I owned in 1981. I've worked in them since 1967.
Russ: You must have been about 12.
Bob: I was 11. [Laughing] I grew up not really knowing I was going to stay in the business, but at some point in the first year of college, I decided I really like the industry and I was just going to stay in it. Right out of school, I opened my first restaurant, in the 80s. Timing was impeccable. Right after I opened it, all the banks failed in America.
Russ: [Laughing] Right.
Bob: And that turned out to be a very opportune time to be in my business at my age at that time, because a very large number of them were repossessed by banks. So for awhile, my job was finding good restraints that were failing and convincing banks to let us have them. That was sort of the beginning of our career. Overtime, I realized I didn't want to buy failing restaurants, I wanted to buy really good ones. So that's why we moved toward Café Adobe.
Russ: What always seems difficult to me - there's two things about restaurant businesses. Number one is having inventory that doesn't go bad on you. And number two, the staffing just seems like an extraordinary difficult challenge.
Bob: Staffing is our biggest challenge. Someone said to me years and years ago that the most difficult thing in our business was the fact that we were manufacturers who had to sell their product a minute later.
Bob: It's a good description. Our business is one in which we're taking raw materials and creating a really good product, and it has to be good every single time. Then we have to sell it within a very, very short period of time to people or it becomes a poor product.
Bob: And I don't want to discount the difficulty we have today with people. In fact, the restaurant business is still the fastest growing industry in America. Last year was the first year that it didn't grow since they started measuring businesses in America. We didn't grow as an industry for about eight months. That had never happened before. But we're back growing again, and it's expected that by the year 2020, we'll be short about two million employees nationwide.
Russ: Well, I believe that it's growing, but the failure rate is pretty high, too, isn't it?
Bob: It has a very high failure rate, but I've found that things that are worth having do.
Russ: [Laughing] All right, that's cool. Now back to that description of having to sell the product real quickly. I can't believe that I don't see, and I eat out often, a lot more restaurants when I order that they're out of stock. I mean, are you going to the grocery store all hours that you're open? Do real well-run, well-managed restaurants actually anticipate ahead of time and have everything right there?
Bob: We anticipate. We benefit from the fact that our industry is so very large now. There are tremendous suppliers out there who help us plan our business, who carry the food that we buy. But any successful restauranteur, and there are occasional days that everybody comes and all decide to order fajitas, but it's unusual. We can plan and forecast, just like any business, relatively close to what our needs are.
Russ: Okay. And then, once again, the staffing challenge. It seems to me that you don't have a real ironclad kind of hold on employees. Maybe you do. Maybe you have a secret, but it seems like they can pretty easily quit and then land a job somewhere else; therefore, having loyalty might be a challenge.
Bob: Loyalty is probably one of the facets of our business that we all work on the most. At Café Adobe, I brought with me, from my past work history, several people who have worked with me for a long time. In fact, one of my top employees, who in my last company was the senior VP, has worked with me since 1975.
Russ: Wow. That's loyalty.
Bob: And we bought into a company that started in 1980 and has today about 400 employees, and about 100 of them have been with the company in excess of a decade, and of those 100, probably 20 for two decades.
Russ: Wow. My goodness. So I'm definitely going to want to move to your entertainment business. We'll kind of do that in this next segment, but tell me first, what are your long-term plans for Café Adobe?
Bob: We're going to continue to grow it. As time goes on, we'll eventually refurbish the operations that have been in business for a number of years already. We're evolving, like all businesses have to, and today we're all becoming greener. We're all becoming more health conscious.
Russ: That means you focus on green enchiladas now, right? [Laughing]
Bob: Yeah. [Laughing] I wish it was that easy. There's nothing that easy about becoming a sustainable business, but it's worth it. And, we're all becoming substantially more aware of health. Let me just say, in the Tex-Mex business, that's a little bit challenging.
Russ: Absolutely, it is. In fact, speaking of the Tex-Mex business, myself a huge fan of Tex-Mex, as are most Texans. Anytime we travel out of the state to go to the West Coast, to the East Coast, every once in awhile you'll see sort of a Mexican restaurant, and you go, "Wow, they just don't get it." It seems like Tex-Mex would work in these other geographical locations. Why hasn't that happened?
Bob: There are cultural differences. Let me tell you that one of my very close friends, who is a competitor, opened in Indiana a Tex-Mex restaurant. He told me that within a short period of time, he had to change the salsa into something approaching pizza sauce. [Laughing]
Russ: So it's that spicy nature that we like down here, it just doesn't transfer across state lines.
Bob: Many of the things that make Texas great are true, and they don't translate.
Russ: I'm talking with Bob Borochoff, the owner and CEO of Café Adobe, and we'll be back with more with him, focused on the entertainment business, after this. You're listening to the BusinessMakers Show, heard here and seen online at theBusinessMakers.com.
Russ: This is the BusinessMakers Show, heard here and seen online at theBusinessMakers.com. We're continuing on with Bob Borochoff. We just got through the chapter on the restaurant business, and Bob, I happen to know that you have quite a history in the entertainment business. So, let's start by you sort of describing what started your interest in the entertainment business.
Bob: You know, people don't ask me that very often. My mother was a singer. I grew up in southern California with her singing and trying to further her career. At one point, she made some progress on it and landed a record contract. She got to go Johnny Carson's Tonight Show, and it was very exciting. That fizzled out, and I got to watch that happen. I decided that I didn't want to be on that side of the business, but I always had an interest in being the producer.
Bob: So in answer to your question, when I was 16, myself and another fellow, decided we were going to book a band and have a rock concert. By teletype, we booked Jethro Tull.
Russ: Wow. Ian Anderson, the flutist?
Bob: Yeah. He was my favorite band, and I was 16. I think somewhere I may still have those papers. Anyway, it resulted in them filing a law suit against my mom, because I couldn't live up to the terms of the contract and when they found out I was under age, everybody was unhappy. I think they eventually just decided to give us a break. That was my first entertainment effort.
Russ: Where was this Jethro Tull concert going to take place?
Bob: Well, that's when we ran into problems. I booked them and then started looking for the venue. It was great learning experience, one that I learned from years later when I went into that business.
Russ: [Laughing] Right.
Bob: So, the next time I got into the business was in the mid-80s after I had already opened a restaurant. I just decided that I wanted to start doing live music. There were some fits and starts where we did some events and would rent a venue. We'd bring in live music and promote something. What really made the business take off was when I started a business I called "Party on the Plaza," in downtown Houston.
Russ: Oh yeah.
Bob: I started that in early 1987 on Thursday nights. We did it every Thursday night, nine months of the year, until 1994 when I sold it to a competitor.
Russ: Wow. I remember them very well. It seemed to me like it was always something that was put on by the city and government, but it was actually a private venture.
Bob: It was a private venture. I had a written contract for the land and with the city. The city was a sponsor. They provided the land at a reasonable price. That was one of the early experiences that I had in which we did public/private partnerships and decided to tie the profits to non-profit. So we donated money to the Central Houston Organization and to the Houston Parks Department. We produced it in its entirety. The net profit/loss was our responsibility. If it lost money, it was my loss. Thankfully, it didn't after a year. The first year was expensive.
Russ: Bob, those were big events, and you had big names there.
Bob: We did. We had lots of big names. Dave Mason, Bo Diddley. I mean, you have to remember this was in the mid-80s, mid and late 80s. We brought out four of the Blues Brothers and Delbert McClinton. The fabulous Thunderbirds. And not every week. Many weeks we had regional and local bands, but we always had two bands every Thursday night, and it was from 5 until 10 at night. We were, at that time, the highest sales per hour of beer in the United States.
Russ: Well congratulations on that. [Laughing] But you continued beyond Party on the Plaza, right?
Bob: Yeah, the company at that time was called Epic Special Events, and it expanded and by the end of the 80s managed all of the concessions at the Galveston Mardi Gras.
Russ: Which is a fairly significant event.
Bob: We did all of the concessions at the Biggest Party in History with Randy Quaid and Miller beer in the late 80s. We actually did quite a few very large events in the Astrodome with folks. We also had a catering business that developed out of that. It was a high-end catering and not just concessions. We catered virtually all the private suites at the Republican National Convention in the Astrodome in 1992.
Russ: For George Busch, Sr. second term.
Russ: My goodness. So this started off as an entertainment thing and actually pushing and promoting concerts, but you started getting into parts of that business after that. Did you every get into promoting more concerts as well?
Bob: Yes. In 1991 and 1992, along with an investor, we built an amphitheater at the corner of 59 and 610 where there was a hill that the investor owned. For a couple of years, we were in the mainstream rock-n-roll amphitheater business.
Russ: How did that go?
Bob: It's a treacherous business. It makes the restaurant business look benign. There are very few players in that business. It's a very, very competitive business. The music business in general is very competitive.
Russ: So your comment about being treacherous has to do with competitors.
Bob: Competitors and, you know, if it rains you lose your money. I lived and died with the weather from the time I started Party on the Plaza. I think I was as tuned in to the weather as the guys who announced it on television.
Russ: [Laughing] So are you telling me that when you do a show like that with big-name entertainment, almost always the contract says you're taking the risk on everything. You owe them a fixed amount no matter what?
Bob: I never did a single one in which it wasn't our responsibility. On some of them, the performer would get a portion of the proceeds, but in general, they did not work based on a contingent number. I will say that in that industry, they're very good about donating their time if there's a charitable cause. Quite a few times. And local people particularly. In the early days, it was career, and I think still today, Clint Black played a lot of events for us for free.
Bob: It was just to raise money for charities.
Russ: You mentioned the competitive nature. What's an example of a competitive difficulty? Do they compete with you trying to book the act?
Bob: Booking the act was probably the most difficult competition. For instance, one time we booked Hall and Oats when they were very popular. One of our competitors called and said they wanted to be the one to book them. They really didn't care whether they shared in the proceeds, they didn't want to have competition. Another time we booked for a private party, Elton John, and his management firm called us and said, "We really don't want to do this anymore because it's creating problems for us elsewhere, and some of your competitors are refusing to book him."
Russ: So you lost the deal?
Bob: We negotiated a compromise, but more than once there were competitive issues in that industry. It's a tough business.
Russ: But if you pull one of these things off successfully and sell lots of tickets and the weather is good, you can make a pretty nice return, right?
Bob: It's got a good risk/reward ratio if you have an iron stomach, because you can lose everything. When it works it works. One time, one of the guys I worked with took a look at our long-term average, and it's very interesting. Looking at it over like seven, eight, nine years, the net profit was not that different than our restaurant business. There are great highs and great lows and it all averaged.
Russ: So ultimately, you just decided enough is enough and got out of the business?
Bob: Yeah. The amphitheater became part of the freeway. The state of Texas decided that they wanted that land, which worked out well for everyone involved. Then over time, I think our company just evolved in other directions. We got involved in outdoor events that were socially rewarding. We did Fun Day in the Park in Houston, for instance. We started doing that in other states and eventually I just decided I wanted to be in the restaurant business. It's where I started, and I enjoy it.
Russ: Well great. We'll be back with more of Bob Borochoff after this. You're listening to the BusinessMakers Show, heard here and seen online at theBusinessMakers.com.
Russ: This is the BusinessMakers Show, heard here and seen online at theBusinessMakers.com. Continuing on with Bob Borochoff. Now Bob, you have such a neat career. Let's assume for a second we have a young aspiring entrepreneur that's listening to your cool story. They're thinking, man, that's what I want to do. What kind of general advice would you give him or her?
Bob: Let me start out by saying it hasn't been all fun.
Russ: [Laughing] I understand.
Bob: Owning your own business is a very frightening proposition. Even today, I find myself concerned because it's a combination of being in complete control of your life every day and realizing that the world around you actually can change over night, and you're not in control. I would say first, if somebody wants to do it, they have to really want to do it. They have to have a fire in their belly and have this strong desire that says, "I've got to own my own thing. I really need to do what I need to do." The flip side of that is, I would encourage anybody who feels that way to do it, because the rewards are great. I've owned my own business now since the early 80s. Most days, I get up excited about it. There have been many times in my career and many sleepless nights where I've laid away saying, "Gee, I wonder what's going to happen." But I have to say, in the last job that I had where I worked for someone, which was a long times ago, in my mid-20s, I felt that way at work, too. I worried about the things I couldn't control.
Russ: Okay. Bob, I really appreciate you sharing that with us and sharing your story with us.
Bob: Thanks. I appreciate being here today.
Russ: You bet. That's Bob Borochoff, entertainment business entrepreneur and restauranteur. You've been listening to the BusinessMakers Show, heard here and seen online at theBusinessMakers.com.