Mike Karns knows restaurants. He also knows real estate. CEO of restaurant group Local Favorite Restaurants, which owns El Fenix, Meso Maya, Snuffer's, Village Burger Bar and more, Karns cut his teeth in both hospitality and real estate. Prior to founding Local Favorite, he was director of real estate for CiCi’s Pizza and was instrumental in the company's nationwide expansion.
On a sunny afternoon, Local Profile sat down with Karns at the storied El Fenix location in downtown Dallas to talk about the restaurant business and his career.
Local Profile: Meso Maya is a company favorite of ours. We have lots of meetings there. The publisher of our magazine has a lot of dietary restrictions. And Meso Maya is one of the few restaurants that he can go to and pretty much order anything on the menu and not have any issues. How aware of dietary issues like that are you?
Mike Karns: Our chef Nico Sanchez certainly was. He built the menu and everything. I don't know if we had any strict guidelines around it or that it was a strict vision. It wasn't the initial vision, but it got built into the plan. We have other restaurants — we have Una Vida Modern Mexican, which is more built around that: vegan and gluten-free.
LP: Una Vida is a beautiful restaurant.
MK: Thanks, we pride ourselves on all the little details and design and picking everything out. And you know, we always hire an architect and designer. We have in-house design as well. And so, you put something together like that, then as it's coming together, like, let's put that over there and swap that color for this color. And so we're, we're modifying down to, you know, 10 a.m., prior to opening at 11 for the first shift.
LP: How did that restaurant come about?
MK: So, we have a restaurant in Orlando coming soon that's called One Life Daily Market. Chelsie DiPaolo is the chef there. And she's a vegan, holistic and clinical nutritionist. And people basically said, 'You ought to open a restaurant.' You know, because she was doing that for families and individuals and things like that.
Chelsea is the chief of staff for the company. When she moved to Dallas, we thought she should really do that here. And we really know Mexican. I had a space — West Village Shopping Center. I am a partner in it, specifically. I own half of it. Mexican food is not represented in that shopping center. We've long had a vision of doing healthy Mexican — eat a little healthier and cleaner and feel good about it and offer something new to the market. I certainly don't want to trash Tex-Mex in any of this, but there was an opportunity to create something like that. We played around with that: What should the name of this concept be, right? And we were basically like, it's really a Mexican One Life. And so we use that as kind of a placeholder. And then we came up with all these names, did all this brainstorming on what we should call it, and then I don't speak Spanish, so I looked up 'one life' in Spanish, and it was 'una vida.' I was like, well, that sounds cool. We've been dancing all around. There it is.
LP: You mentioned the West Village Shopping Center. How did you get into the restaurant business?
MK: I was in the retail shopping center leasing business. Out of college, I moved into tenant wrap, which I really liked, helping tenants find business. It was early on in the late 80s. And having grown up in restaurants, having been a dishwasher, a busboy, a waiter, that kind of thing. I've just always gravitated towards food and service and hospitality. And so, to be able to help a restaurant find a location became a good home for me. And I did it for several clients for a while, and then I started doing it exclusively for CiCi's Pizza. I worked for them as a real estate broker but did their real estate function for about 10 years and did 400 deals around the country. I had a great relationship with the owner, and I'd pick a good spot for a location. Then I'd get him in the car and we'd go drive around and look at key locations. We'd make letters of intent. But then it morphed into, I go pick the location, negotiate the economics, negotiate the legal, take it to him, and he'd say, 'Oh, yeah' — like, stamp off on it. I mean, I had to pitch him first. He trusted me as the company got bigger. I didn't really get to the answer to your question, which is, so then after I left that job, I did real estate development. I was buying real estate along the way.
Then the opportunity of El Fenix came as an opportunity. I just happened to hear about it. And sounds perfect, because I can go keep buying real estate again, I can kind of represent the brand. And then use that as a growth vehicle to go grow and buy other real estate. That's how it started.
LP: What year was that?
MK: I contracted at a 2007 price, which was high. Then it closed at that same price and the economy just slid off the cliff.
LP: With the whole Bear Stearns thing ...
MK: You could kind of see something was coming and people told me not to do the deal, retreat on the price. I couldn't see the future, what was going to happen, right? I just stuck with it, closed it and got it done. The bank dropped out though, right before closing. So then I had to scramble and get an extension. It was a big blow-up.
LP: So, it's 2008, and you find yourself the owner of El Fenix. How did you parlay that into the company you have now?
MK: When we acquired El Fenix, they had 15 restaurants and owned about half of their real estate.
LP: Do they own this real estate? (referring to El Fenix in downtown Dallas)
MK: Well, it was a very small site. And during the downtime in the market, we were able to cobble together a bunch of little tracts to now have this large piece of land. So, it was a bunch of little 5,000-foot tracts of land and 5,000 to 30,000 square-foot tracts of land that we assembled that created this whole big block.
We had El Fenix and then what is now Meso Maya used to be called the Luna Tortilla factory. It was built in the 30s and in a historic building. For many generations, the Luna family ran a tortilla factory in a small restaurant there. So we acquired that. And originally, I'd wanted to add mole to El Fenix, and our operators at the time were concerned that it was very hard to make and wouldn't fit in — that they had actually used to do it before, and it wasn't going to work. So I was willing to be disruptive, so to speak, but not to them and the existing clientele base. So I was trying to figure out what this thing needed to be — maybe El Fenix 2.0.
So I wanted to create something based around mole, steak, seafood and freshness. And so we looked at Tex-Mex. And said, what is that? What is Tex-Mex? It's sour cream, ground beef, chili con carne, yellow cheese, that kind of thing. So we looked at it. Those were defining moments of how to go forward. We said we're not going to do that. And then we said we wanted authentic Mexican flavors. But it needed to be familiar. It couldn't be presented and maybe Mexico City kind of way that I called 'tall food,' where it looked kind of too fancy or something but it needed to be real Mexican food. So we kind of represented that in two items: rice and beans. Not, Tex-Mex look but authentic Mexican flavors. That was 15 years ago. So we were the leader, and not only Dallas, but we had people coming from all over the country to come to check us out.
LP: I remember obviously coming here and eating at Tex-Mex here at El Fenix as a kid in the 1980s, but I do not remember that style of food in Dallas.
MK: Oh yeah. I had read a book also called Blue Ocean Strategy. It talks about, you know, you can compete in the red ocean — and I looked at all the Tex-Mex places, and we're all serving the same thing with a little different twist. How can we move to the blue ocean where there's not as much competition, right? Other people have done it with the kind of elevated Mexican food, but it was something you might go to once a month or once every other month. A little too fancy, a little too out of the box. We wanted to make people feel at home and comfortable but with a new fresh flavor.
LP: So, most of your restaurants are in North Texas?
MK: Most are in North Texas. We've created about half of our concepts and acquired the other half.
LP: How do you decide which ones to purchase?
MK: We try to look at a lot of different things. For me honestly, I've got to relate to the concept and be interested and excited about it and feel like I can do something with it. The numbers certainly have to make sense. But, for example, if somebody came to me, and said they had 100 Wendy's franchises and they were going to discount them, would I be interested? I would absolutely not be interested in it no matter what the financial interest economics were, because that just doesn't fit within what we do. So we're about what fits. The company is about passion, pride and performance. And so we got to be passionate about what that is and have just a heartfelt connection.
LP: Ninety percent of restaurants go under in the first five years. You've been wildly successful. Why?
MK: We aspire to be the number one restaurant career opportunity in the nation. It's kind of like a driving force of mine. And I started as a dishwasher, busboy and waiter and now kind of found myself in the corner office, right? It's a cool career path for a lot of different people that may not have some other opportunities and things and to be able to provide a platform for people to grow. That is something I'm passionate about. So I think that attracts good talent, and people who share that same vision.
We want to be the local favorites. In whatever market we're in, and whatever location with whatever brand. And there's certainly some copycats out there now in the Meso Maya category right now. But we want to be the local favorite and have a vision that when somebody grabs and opens our front door, they're saying I trust you. I trust you with my hour and a half, right? And so we treat that with great respect when a guest comes in the door. And that's like the core of hospitality. You're having somebody over your house.
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