The BusinessMakers Radio Show

Episode #465: Tracy Vaught and Hugo Ortega

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Russ: Welcome back to The BusinessMakers Show brought to you by Comcast Business, built for business, coming to you today from the sought after patio at Backstreet Café and my guest are Tracy Vaught, the Founder of Backstreet Café and Hugo Ortega, the Founder of Hugo's; Tracy, Hugo, welcome to The BusinessMakers Show.

Tracy: Well thank you for having us Russ.

Russ: You bet; it's great to be here. I must admit up front I've, uh, done research for this interview for decades, I've eaten here many times, I've eaten at Hugo's a whole lot over the last decade and this new third restaurant, Caracol, I've eaten there 3 or 4 times since it opened, had an event there and it was impressive, so I like your product and I like your service.

Tracy: Well thank you very much; it's great to be here.

Russ: Good. Well let's go back to the beginning, uh, the background on you that sort of came up in my research too of this incredible book on Backstreet Café, I mean it's just really impressive, uh, you were a Geologist?

Tracy: Yes, I was a Geologist.

Russ: There aren't too many Geologists that dive into the restaurant business like you have, tell us how that happened.

Tracy: Wll I was working for Conoco at the time and it was 1983 and the writing was on the wall that it looked like, um, business was going to go down. Um, the first wave of layoffs had occurred and I decided to start looking for something else, uh, because, uh, in the beginning of my career I spent a lot of time out on wells and as my career progressed I was in the office more. And I didn't really like it as much so I started looking for something else to do and, uh, you know, the only other thing I really knew, uh, that I was interested in was cooking and antiques. So I went looking for a location and to where ever that would take me and I ended up here at Backstreet.

Russ: The rest is history?

Tracy: That's right.

Russ: Well as you know this show has a business audience that knows how hard it is to start a business - the trials and tribulations, the heavy lifting - but we're also under the impression that starting and achieving success in a restaurant is even more difficult. Uh, was it easy for you or was there difficulty along the way? Were there any challenges?

Tracy: It's a very hands on, uh, detailed business and I think if you don't have the time to spend then you shouldn't go into it. It's also very expensive now. Uh, when I started Backstreet, uh, we did it on a shoestring budget now it's difficult to do that; you really have to commit a lot of money to it so it needs to be something that you really think through carefully if, um, you know, if you have that idea in - in mind.

Russ: Obviously you've been, uh, and experienced quite a bit of success but was there a point in time, like in the history, where you finally felt like you were over that chasm of wow, I could still end up failing?

Tracy: Oh, I don't think you ever really get over that. Um, and I - maybe it's because I run a little bit scared - but I think you - you're - you're only as good as your last meal, competition is always coming in, um, so you have to reposition yourself, uh, slightly all the time in order to make the business attractive to current audiences. So it's never like you could just sort of coast - or feel like you could coast, um, uh, don't you agree? I don't - I don't - I don't think you could ever just say yeah I made it, now it's okay.

Russ: I think Hugo's looking at you like I'm coasting all the time, this is easy.

Tracy: I don't think so.

Hugo: I think it's, um, it's very much what she said, you know, and Tracy's been, uh, here so long and we've learned so much. And, um, but like she says, you know, it's, uh, it's always - it's always, uh, very interesting how it develops and, um, you know, fancy restaurants open just down the street, uh, often in River Oaks shopping center and - and they're sole owned (??) so. Uh, in the big scheme of things the way I see it is we - we have so much to learn; I mean we've been here 30 years and it challenge, you know, but on the other hand we have a brand new restaurant that is, uh, 4 months so I think, you know…

Tracy: But they're both very challenging though.

Hugo: Yeah, yeah, and, um, I think we have the, um, the, um, upper hand. I mean I can see that we learned from here and then we apply it to the new place; we learn to the new place and apply it in a - what is now a 30 years and counting restaurant.

Russ: Really neat.

Hugo: I don't know, what Tracy thinks about this but it's a win/win situation. And between those 2 points, you know, Hugo's is in the Middle which, you know, we - we also make it - make it work and we make, uh, you know, stuff there and stuff at Caracol and so it's very interesting how it works. It is for me, it's interesting.

Russ: Really cool, really cool. Well, and it's interesting too, the way you come together as a husband and wife team; you entered the picture after, uh, Tracy was down the path a few years with Backstreet Café and became a family then and then launched Hugo's. What - you have a background share with our audience your background; you were born in Mexico?

Hugo: Well, I born in Mexico in, uh, in '65 and but a long time ago I got a phrase that I'd like to mention it and that phrase is, uh, um, you're born poor in Mexico, you die poor. So I said no, that's not going to happen to me; let's go to Houston, let's go to Texas. So, you know, coming over here it, um, it really opened up a great deal of opportunity for me, myself, my family and the community and, uh, now, um, you know, we, um, we have done well, then people, um, care and love who we are and - and those - it's a great thing.

Russ: Good. And here you are, a third time finalist in the James Beard Award, how - that must make you feel successful.

Hugo: Well, the only downside of that is that you have to go to New York and it's so expensive to go down there. But you know..

Russ: But what an honor that is, man.

Hugo: It - it is, yeah it is. I had the great opportunity to go to the James Beard house, in his home - in his home that he turned, you know, to become what it is today and basically, um, raising money for all the culinary world and what a great thing. So we had the great opportunity to go 3 times there and now we on our third trip to, uh, the James Beard - James Beard awards so that's - that's pretty neat.

Russ: Okay, let's pretend right now we have a viewer or a listener who has not been yet to Hugo's, I imagine - maybe they're new to Houston - describe Hugo's to them.

Hugo: Well, it's a, um, it's a - it's a wonderful little restaurant and, um, we - Tracy and I and, you know, a few other people - we understood what the Mexican cuisine have to offer to the world. And, uh, so at some point, um, we learned they have 8 regions and, uh..

Tracy: Culinary regions, uh huh

Hugo: Culinary regions, and, uh, so we, um, we want to feature these plates, these classic plates that every region have to offer and, uh, then from there we started to build the menu. And, uh, and it was quite wonderful because at some point, uh, you know, early when we opened I said well, I'm going to travel a lot to Mexico because I need to go and learn.

Russ: Okay, and did you go to Mexico?

Hugo: I - we - we travel to Mexico often with the family and myself and when we read the book - wrote the book, excuse me - um, Hugo's de, Street Foods of Mexico we went to several states and this has been a great thing.

Tracy: You know, the beginning of Hugo's, um, what's sort of interesting about it is that, um, Hugo - I would take Hugo to eat Mexican food around town and he'd say well I've never - I - this isn't Mexican food and I would say well what do you mean? You know, he said well I've never had, uh, um, fajitas, I've never had, um, uh, flour tortillas, I've never had, uh, um, a burrito, remember? And I - so I…

Russ: What about tamales? Did they - they have tamales, all right; good, I thought so.

Tracy: No, they have tamales there. Well so we - that's when we started doing research - or I did and, uh, realized that, um, the culinary regions were fairly distinct and that Hugo grew up in an area where those things were not available or were not made, so he wasn't familiar with them. Um, and so that caused me to want to understand that a little bit better and, um, you know, that's - because what he was used to eating wasn't - either wasn't available here or we hadn't run across it that made us feel like there was a - a niche for that or there was an opportunity to, um, and - and it - plus it was a - a great, um, uh, as we were saying earlier, you know, you have to - your inspiration has to be pure and - to do a new business - or should be pure - and I think that's where I saw, uh, that opportunity.

Russ: Well it's a very interesting menu, there are several things that I love, but I mean how did you come across things like when you feature the squash blossoms and you're actually incorporating those? I mean, is that something that came out of Mexico or is that something that came - it did, wow.

Tracy: Yeah, that is something that is very common there in Puebla, so…

Hugo: Puebla is a center - it's in Central Mexico where you have the squash blossoms and everything to do with the squash blossoms. So when we, um, decide to put the squash menu in the beginning about 8 - 7, 8 years ago, we used to fly the - the - the flowers - the - the squash flower from, um, from, um, California, San Diego area and part of, believe it or not, the - the border of, um, Ensenada is where - where they bring the flowers - the squash blossom - the squash. Um, so as I progress on this we - we make a friendship with a local farmer, right and, uh, I told him about the, you know,what I was envisioning and I say, you know, this is pretty expensive to bring from California, you know, through the summer. I said what about you - you try to plant some squash blossom in your garden and maybe, um, you know, we can - you'll be able to grow it.

Russ: And that's in Texas?

Hugo: That's in Texas.

Russ: And he does it now?

Hugo: Yeah.

Russ: Oh, so interesting. All right, so take me to, uh, restaurant number 3, Caracol. I mean here you are operating two that has pretty big staffs, pretty big budgets, pretty big payrolls and the two of you decide let's go do a third one and that thing is, uh, breathtaking. Eh - eh, I - don't get into the actual facility cost but it must be expensive there; uh, the décor, the ambience is beautiful and the menu is over the top. I mean, uh, it looks destined to be, uh, very successful but were you bored? You just didn't have enough to do with 2 restaurants and so let's do a third?

Tracy: No, I - I - I don't know if - if you could say that but I - I think sometimes when you have the inspiration to do something, it doesn't let go of you, it - it continues to pick at you or - or your brain won't let you sleep or, uh, so it was something we talked about over and over. And we probably worked for 2 or 3 years looking for a location so, uh, we just never gave up on it so, um, I think - don't you think it's just something that once you get that bug and you - it's, uh, you can't shake it.

Hugo: Well everything started way before then because we - we have a beach house and - and we - in Galveston and Tracy call it Caracol (13:50-Russ: oh) so…

Tracy: Oh, we bought that, uh, right after the hurricane about, uh, what was it 200_?

Hugo: Ike

Tracy: I mean it was right before the hurricane, excuse me, uh…

Hugo: Year before.

Tracy: Yeah, uh, yeah, so 20007 or 8, something like that and so we really have been working on this a long time. I guess, uh, that would prove to you that we've been talking about it forever.

Russ: Okay. Well tell me this, and this once again is directed at our business audience, when - when I look at operating a restaurant I can't imagine how you balance the inventory with the demand and how you always keep the right amount of staff there. Is that - are those challenges or is that just automatic for you guys?

Tracy: No, it's not just automatic, that's really challenging and I think, um, as far as when we started Caracol of course we had way more staff members than we needed, uh, to do, you know, it takes 5 guys to screw in the light bulb kind of thing when you first open but, um, as you get better and better and you move things around and add shelving and do things to make your job more efficient and you get faster with your fingers, um, then you can go down a person and down a person and, you know, we met regularly and we'd say okay now, do we still need this many people in the kitchen and we still need to get - waiters only got 2 table stations in the beginning and then - then we went up to a 3 table station and then we had a few that were real experienced who got a 4 table station. So it was like that, very gradual; day to day we'd meet and decide whether it was time to cut back or…

Russ: Okay. I know from the book that you give, uh, your staff lots of credit but boy when you really dig into it and read it, it sounds more like a family, uh, than it does a company because there's been lots of family members and - and - and offspring of family members that have joined you the long - along the way, must make you feel pretty good?

Tracy: Yeah, yeah it does, it does. Uh, our daughter worked, uh, last summer doing the music on Spotify for each restaurant and so, uh, this summer she's probably going to come back and maybe do a little hosting. She's scared to death of it but she thinks she might be ready to - to do that.

Russ: Great. Well I really appreciate you both spending some time telling us about, uh, your incredible restaurants.

Tracy: Oh, thank you.

Hugo: Thank you very much Russ, it's a pleasure.

Russ: You bet.

Hugo: Thank you.

Russ: All right, and that wraps up my discussion with Tracy Vaught and Hugo Ortega, Founders of Backstreet Café, Hugo's and Caracol. And that wraps this episode of The BusinessMakers Show, heard on the radio, seen online at, brought to you by Comcast Business, built for business.