Franchisees

How a Federal Agent Helped a Struggling Taco Restaurant Turn a Profit

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This story appears in the March 2015 issue of Entrepreneur. Subscribe »

It wasn’t an accident that Audra De Vera became an agent for the U.S. Department of Housing and Urban Development. She’d spent her entire adult life training for the job, and she was good at it. 

For five years, she ran task forces, testified in court and scoured ledgers searching for complex financial fraud. But the work meant being away from home five days per week. The government sequester and looming cutbacks also unsettled De Vera, who wondered whether she and her husband, a U.S. Marshal, could rely on their jobs to gain financial autonomy.

That’s when a relative told her about a Chronic Tacos franchise near her home in Corona, Calif. Despite a great location, a bar and a hip brand, the unit was hemorrhaging money, and the owner was ready to sell. De Vera, who was familiar with the restaurant, saw its potential but needed to know exactly why it wasn’t profitable. So she put on her federal-agent cap and looked into it. 

“With my financial background, I approached it just like a case,” she says. “You have to follow the money and go from there.”

Since taking over in April 2014, De Vera has improved the unit’s sales by $12,000 to $15,000 per month. We got her to declassify her story and tell us exactly what she found during her investigation. 

Did you really stake out the restaurant?

Yes, I had the opportunity to observe it for a month. I spent a long time watching the employees, watching customers and going through the books. When I started looking at the numbers, I saw that payroll was super high. The owner was never there, so the place wasn’t staffed appropriately. There weren’t enough employees when they needed them, and there were too many when they didn’t. They were paying lots of overtime. Really, there was no one in charge. The employees were running the store as they saw fit. 

What other problems did you find?

Food costs were really high, and I wondered why they were spending so much when sales were so low. It turned out portions were way too large. A franchise is generally standardized, but as I watched, the servers would give someone they knew two heaping portions, and someone they didn’t know would get one that was too small. There was no guidance. 

Also, the décor was almost scary when you walked in. It had been decorated by the West Coast Choppers [who designed a taco truck and some restaurants for Chronic Tacos in 2009 and 2010], and there was an eyeball hanging from the wall and monsters and stuff. It needed a facelift. 

What about the bar?

This is one of three Chronic Tacos that serves beer and wine, so it should have been doing better than the others. But I wouldn’t have brought my kids in there. The bartenders were half-naked; it was almost like they were wearing rags to work. It might be fine for male customers, but the way it’s designed, the bar and the dining room are mixed, so women and mothers coming in here were offended. We even had male customers say, “This is a little much.” There’s an old saying that if women want to hang out somewhere, the men will follow. 

What happened to the employees? 

I retained six out of 12 people, and I made one guy the manager; he’d never been given the opportunity before. I couldn’t have turned the store around without great management. [With] the other people I kept, I could see they liked working here—they just needed more structure and training.

Wouldn’t it have been easier to find a franchise that was in better shape?

Coming from my background, if I just took over a store and ran it, I wouldn’t be satisfied. I went to school to be a federal agent. I accomplished that and won awards. To throw that away for something that was a no-brainer wouldn’t be worth it. All those skills I developed as an agent—coordinating multiple police departments, putting teams together, doing financial investigations—I use for this. Except to me, this should be a much less stressful environment. I mean, we’re serving beer and tacos. It should be fun. 

Edition: December 2016

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