March 2024
Generally, when US-based investors consider investing in Latin America, they think of two countries: Brazil and Mexico.
That certainly makes sense because those are the two largest economies that usually move by themselves, although Mexico’s moves frequently align with those of the US.
Additionally, different corners of Latin America’s commodities industry benefit from the steady stream of raw materials from South America to North America, including producers of lithium, natural gas, and oil.
We contend, however, that there are many other good investment opportunities in the region and one of the best examples is Peruvian food.
Incorporating flavors, tastes, and influences from around the globe, Peruvian cuisine has experienced incredible growth over the past decade with both consumers and critics.
The number of Peruvian restaurants in the world now total 400—double the number a decade earlier—and in its 2023 list of the world’s 50 best restaurants, Eater named four Lima-based restaurants.
Paris? Three.
The Chef Behind the Secret Sauce
Our investment opportunity is built around Acurio International, which operates 71 eateries with all its brands being profitable in 12 countries across North America, South America, Europe, and the Middle East, and is looking to expand the US footprint of its Jarana and La Mar restaurants with our current fund offering.
Most discussions about the company eventually lead to its founder, Gastón Acurio, who has become one of the world’s pre-eminent chefs in his 30-plus years in the profession.
While many point to his success in introducing the flavors of Peru to foodies and new customers around the globe, what has resonated the most with us in our partnership, which started in 2021 is Gastón’s passion. His commitment to the food and culture of Peru.
It’s that unwavering focus that makes managing the business side easier because he’s always on top of the menu, the food quality, and what needs to be improved as he innovates in the dishes. And it’s not just in one restaurant, but in every brand within the company.
Gastón’s love for Peru lives far beyond Acurio International’s bottom line as well.
In 2007, he established the Pachacútec Culinary Institute in one of Peru’s poorer communities to create a career path for students in the culinary arts. Whether that leads to chef roles within his company or the students’ own restaurants, his goal is to help improve the opportunities for fellow Peruvians while contributing to the positioning of Peruvian food as one of the top cuisines in the world.
Size and Depth Matters…
Frequently when we hear from someone who’s invested in a restaurant before, we hear about the disappointments resulting from backing a friend or neighbor who couldn’t make it work.
Certainly, the restaurant industry has its risks, as do any startup ventures. And Acurio Restaurantes has admittedly experienced its share of missteps over its 30 years of existence.
Where the multinational company differs from a one-off startup, however, is that it has endured the mistakes and, perhaps more importantly, learned how to avoid making them again. Whether the issue is related to the menu, the operations, or the market.
Managing one restaurant is one thing. Drawing upon the knowledge of managing 70-plus restaurants around the world is another.
And that leads to efficiency in terms of how to invest, where to invest, and what elements are most important when determining an investment.
For example, the size of a new restaurant is a regular consideration. The effort that’s required to open a 100-seat restaurant in one of Bolivia’s largest cities could be about the same that’s needed to open a 250- to 300-seat in the US. So, obviously the projected profitability is higher for the US site.
Similarly, the evolution of different brands within the company reflects the knowledge gathered through successes and, yes, failures as we seek to strike a balance between what level of interest is in a market and what we can offer.
…and So Does Expertise
With three decades of popular and critical success in the kitchen, Gastón clearly knows his way around a menu.
Acurio Restaurantes has matched that track record in its management team.
For example, the company’s CEO of all operations outside of Latin America has more than 30 years of experience in the hospitality industry. Based in the US, he oversees the restaurants there and he has extensive knowledge of the key performance indicators required to be profitable. Deep insight into factors such as how much the rent should be, how much the food costs should be, how much the labor should be, and so on.
So, everything is rooted in numbers on that side of the business.
Proof that the blend works?
The March 2023 opening of the first Jarana concept in the American Dream Mall in the Meadowlands Sports Complex in East Rutherford, New Jersey.
Within months of its debut, the location was profitable and the average ticket size had increased to $65 from $50. Building on that success, the second Jarana location is expected to open by the end of 2023 at Esplanade at Aventura, a mall complex near Miami.
The focus on shopping malls reflects the changing nature of the American shopping experience. While online shopping has taken much of the volume of actual shopping, malls offer a place to go eat and share time, so they continue to see strong traffic levels.
In addition, the festive, vibrant atmosphere of this new offering is quickly looking like an excellent complement to the high-end La Mar brand, which started in San Francisco, added Miami 10 years ago, and will expand into Seattle as part of the present expansion plans.
A Generational Matter as Well
The unique risks and challenges of the restaurant industry can be exacerbated on a location-by-location basis—both within a country and on the other side of the world. And such issues can be further magnified when the eatery is brand new.
Perhaps one of the biggest advantages of being part of an organization with deep experience is that the new venues are part of a second generation of the business.
That is, in the first generation, everything that must be done is happening for the first time. In the second generation (and beyond), some of the infrastructure may be in place, much of the knowledge is rooted in actual experiences, and the investment of time, energy, and resources is likely lower.
Having worked through the startup pains of its first generation, especially in its US footprint, Acurio Restaurantes has emerged as a solid candidate for investors looking to add a Latin American flavor to their portfolios as the company’s expansion plans flourish.
