Chilling at Chilitos - Entrepreneurs acquire, then turn around restaurant business
When former workers Christopher Boxe and Craig Hammond acquired Chilitos Restaurant on Hope Road in April 2015, within two months, their landlord gave them notice to vacate the premises.
It turned out to be one of the best things to happen to the business.
"The restaurant was essentially three months from closure," said Boxe, as the restaurateurs recounted their experience in a Gleaner Business interview.
It forced the new entrepreneurs, both now 29 years old, to work hard at staving off failure even before they had a chance to fully test their prowess.
"We found out we had to leave in June 2015, right after we took over. The landlord told us until September," said Hammond. "This forced us to find a place quickly."
Chilitos eventually relocated further up Hope Road and built an open-floor restaurant with wooden panels and a shipping container structure. It is now one of the "weirdest" but well-patronised restaurants in Kingston, especially sought out by young professionals.
Today, customers often spill over into the sidewalks and streets, requiring additional parking on regular days. On its special celebrations, like Cinco De Mayo - May 5 - customers actually parked at the Sovereign shopping complex at 106 Hope Road and walk down to No. 88, the home of Chilitos.
That's the type of loyalty Chilitos has garnered in two years, especially since those same persons could have supped more conveniently at the ultra-popular Sovereign food court. And investors have been taking notice.
Outside investors are trying to get a slice of the restaurant, which sells Jamaican-infused Mexican dishes, but the two owners say they are unwilling to take on partners at the moment.
The relocation to No. 88 was not smooth as the development of the new restaurant took longer than anticipated.
The owners "begged" the landlord for more time, and got a reprieve to December. At that time, sales were down 70 per cent from the peak in 2010, cash flow was limited and staff was on half-pay, Boxe recalled.
"There were some days that only made $10,000, which didn't even cover light [bill]," recalled Hammond. The partners knew that they would need to bring order to the business, and soon, to avoid losing their gamble on the restaurant they loved as patrons.
They tackled the eatery's systems to bring consistency to the operation, and began paying closer attention to stocking the business.
For instance, on their most popular day they used to run out of an essential item at 9 p.m., well before closing time, which cut into potential sales.
"We had to stabilise the business and shore up the foundations. Before, there were no systems. No structure. No SOPs. So our mission was to put structure to the madness. That was the only way we could have sustained growth. We couldn't keep winging it," said Boxe.
"Ultimately, the business has to be able to be sustained without me and Craig around," he said.
Next, they tapped into their database of long-time but jaded customers.
"The original customers just wanted a reason to come back. And we gave them one," said Hammond.
VISION BUILTON HOPE
As a result of the new systems, both said that sales have grown 20 per cent since acquiring the property. That provided the free cash flow to reinvest in the business and pay money on a new property. They settled on the former location of Carmax, a pre-owned car dealership that ceased operations.
"I heard that a lot of people were after this property. We initially put in an offer and it was immediately rejected," Boxe said.
Their second offer, however, was 30 per cent higher and led to a meeting with the realtor and owner. Both men had to sell their vision to the new landlord. It was a vision built on hope.
The new restaurant was capitalised with $5 million, most of which pertained to the new structure. No bank would give the then 27-year-olds a loan.
"Not one," Boxe recalled. "We built this place with hope," he said.
"We are not rich and there was no trust fund. We approached several banks and they told us some policy on why they wouldn't give us money."
It was only after the restaurant showed explosive growth that the banks began calling, he added.
From the moment the restaurant opened on November 2016, sales have been climbing.
"When we opened at the new premises, sales increased 130 per cent and have not stopped," said Boxe.
It's more than four times the 30 per cent growth the owners were hoping for, and in tandem, they more than doubled their staff from 12 to 30, and increased their procurement of stock. For example, instead of five cases of chicken weekly, they now need 10 cases and their order of 200 pounds of tomatoes has climbed to 500 pounds per week.
As to why Chilitos is growing so explosively, Boxe reasoned that there is more parking space for customers, and the physical look of the restaurant better reflects the ethos of the Chilitos community.
In other words, customers like the ambience, so they stay longer and spend more; they like the culture of 'chilling' and community served up at the restaurants, the partners said. The customers know the bartenders and waiters by name, often because they go to the same social events, and in some cases, the same schools.
Chilitos' evolving 'chilling community' brand has given Boxe and Hammond a way to compete, at least for now, against larger and more heavily capitalised establishments in surrounding areas.
Although Boxe studied construction and Hammond did biochemistry, the businessmen and friends said they always knew they wanted to enter the restaurant business. Both tried a run a catering business together. It failed, but a partnership of trust developed.
"It is tough being in business with friends, but previous experience has shown how to work around our issues," Hammond said. "More than seeing each other at our worst and making mistakes, we have picked ourselves up and pulled through it. We have an unwritten rule that says only one of us can freak out at a time," he said.
Both worked at Chilitos at different times while studying at university. Hammond even worked a second job when initially acquiring the restaurant. He walked off his second job to focus on Chilitos after Boxe called him one day freaking out about the business.
Chilitos first began operating in 2001 from its old location across from Jamaica College. It was owned by Lourdes Carby, who subsequently ceded the business to her three children, Nadia, Loraine and Julio, according to Boxe.
The business was relocated lower down on Hope Road in proximity to the Bob Marley Museum in 2007. There was also another location in Montego Bay, but it lasted for a short period. The Carby siblings relocated overseas, one by one, with Loraine controlling the operation. Boxe and Hammond acquired the business from Loraine.
Both men now see themselves as the new stewards of the Chilitos brand.
"That's all we think we've ever done," said Boxe.
Investors are also lining up, with Hammond noting that they get enquiries about possible equity participation on a regular basis.
But: "We are not ready for that, yet," Hammond said. "We still need to optimise our internal systems."