Craving LA style street tacos, Kenny Park and his co-founders launched a multi-million dollar restaurant business in South Korea and are now looking to serve it to the rest of Asia.
After moving to South Korea in 2010, Los Angeles native Kenny Park realized he couldn’t find anyone making and selling one of his favorite dishes from back home. A great tasting taco, which you can pretty much find on any street corner in all pockets of the city. I know this because I live here.
We can look up countless blogs to find the best taquerias in town, scour through lists of foodies’ favorites and follow daily updates on worthy newcomers.
But in Seoul, a great taco or even Mexican food in general is as abundant as apple pie. It’s non-existent even though our two cultures share similar palates for spiciness. So Kenny did what every entrepreneur does when facing a problem. He fixed it.
“Mexican food in Korea was pitiful in 2010.”
His “fix” is Vatos Urban Tacos, the restaurant business he co-founded with Juweon Kim and Sid Kim (unrelated), that blends Korean and Mexican flavors and ingredients to make the ultimate “baja style street tacos” from galbi short rib to braised carnitas. You heard of the Kogi truck? Take it up ten notches and you get Vatos.
Having eaten at his flagship restaurant in Itaewon (a hip neighborhood in Seoul) at the end of last year, I can tell you that their food is spectacularly awesome, comparable or better than the best dishes we have here in LA.
I could go on and on about their incredible wings, the delicious quesadillas and tamales, but I want you to know how these three guys with the bare minimum culinary experience launched this multi-million dollar business.
Originally, Kenny put his taco business idea up on Kickstarter, even though the crowdfunding platform didn’t have an overseas section. The project was reluctantly accepted but quickly surpassed the initial goal and ended up with $15k. But it was still way below the $100k Kenny needed to actually start the business, securing a location, buying equipment and hiring labor.
Though he didn’t get fully financed through the Kickstarter campaign, Kenny ended up meeting Juweon, who not only came on board to join the venture, but then brought on his entrepreneurial friend, Sid, as the third partner.
Together, the three of them raised about $150,000 from family and friends to start a 450 sq. foot shop in an alleyway behind the main Itaewon street.
So how do you get a restaurant location in Seoul?
“I hit the streets and did guerrilla style research, asking business owners how much real estate and rental prices were worth. All signs pointed to Itaewon, which had a huge aura about it.”
For that tiny first space, Vatos didn’t have to pony up any key money (variable price that the prior tenant can demand from the new tenant) because there was no prior tenant. They were lucky. Key money is a part of doing business in South Korea.
In terms of cooking, none of the guys were trained chefs. Kenny tells us how he came up with their initial menu. He looked up recipes online and in books and made the dishes himself.
“I never paid my chef dues but I’m a backyard BBQ guy and I knew we could offer something better.”
They kept the menu simple while Juweon concocted specialty drinks he had learned as a bartender while attending the University of Texas in Austin. The combination of the crazy drinks, the great late night grub and the party atmosphere turned out the be the best recipe for success.
“Our menu was simple, late night drunk food. Eat, drink and chill was our motto.”
The lines of hungry Korean and foreign customers grew long, all waiting excitedly to taste something new. How did they find out about Vatos?
It wasn’t through social media.
Because Instagram and Twitter weren’t and still aren’t as popular in South Korea as they are here. Vatos got their first customers strictly through their friends and via word of mouth for the first month and a half. Because that’s how Koreans roll.
And how good was their business in that 25 seat shack?
Their monthly rent was $2k and all they had to pay for was the cost of goods (info on that later). Remember, the co-founders were the labor.
“For our first year revenue, we blew our projections out of the water. We peaked out at $140k for a month.”
With margins at a ridiculous 35-40%, they broke even in four months. From day one, they were never in the red. That’s just dirty!
Though all of this sounds too easy, Kenny explains that they did have big issues from the get go. Their main problem was getting access to fresh ingredients.
Koreans don’t eat cilantro, use Mexican chiles and maseca (corn flour) so not only were none of these ingredients available at the local market but there were no distributors to help import the materials in. So they did what all cartels do.
“We suit-cased it all in from our Los Angeles friends for seven months.”
Basically, they used mules on flights to carry ingredients for their dishes instead of narcotics. Goes to prove that entrepreneurs always find a way.
These days, ingredients are shipped from LA to Korea through traditional methods.
In order to expand their restaurant, they had to raise about $500k to open up shop in a larger space. Good fortune hit them again when they found a former post office resting on a hill high above the street in the same neighborhood. No one else saw its potential and they negotiated themselves a great deal.
There’s a few great advantages of opening up a restaurant in Korea compared to the US. One of them being the time it takes to build out the shop.
“Construction here is so fast. What it would take six months to build in America, it would take three weeks to a month here.”
That’s money saved. Plus, there is no liquor license in Korea. Anyone, anywhere can sell alcohol in Korea to generate a little income. This is important because the alcoholic drinks were and are a vital part of their revenue.
After expanding their menu, gross sales in the new larger Vatos was in the mid seven-figure range with the company shooting for the industry margin standard of 15-20 % net after taxes.
They took those earnings and reinvested them into one other flagship in the invite-only Galleria Department store (which takes a gross percentage of sales), a “tweener” size one in the neighborhood of Chamsil and two express branches which are scalable for future growth.
Kenny and his co-founders also opened up the very first Vatos outside of Korea in Singapore this past December on Beach Road near the Facebook headquarters. And they’re getting a lot of international interest to expand further out.
“We want to be the Mexican restaurant brand in Asia.”
Besides food service, Vatos is also creating new revenue streams by getting into the supply side of the industry, importing and distributing the Mexican soda brand Jarritos throughout Seoul.
They all also looking to incubate and invest in other young restaurateurs who want to start a food service business in Korea, just the way they began five years ago.
“What I learned about Korea is that they’re not known for inventing but what we do well is being excellent at refining. And our general work ethic is amazing.”
In terms of authenticity of their food, Vatos has had a great response from the Mexican embassy, sponsoring their events and relishing their ties to the community. It also helps that a higher authority enjoys their product.
“The Mexican ambassador loves our tamales and we have his stamp of approval.”
So they make delicious food, they’re minting cash, and have the respect of a higher authority. They’ve got the formula down in Seoul and it’s an excellent recipe for the rest of us to follow. But just remember, you have to start out with a great product.
Kenny offers the following advice to new startups.
“For funding you need a liaison. You have to know the market, the team is important, and really listen to experienced people. Otherwise, it’s not rocket science.”
Next year, Vatos Urban Tacos is expecting to do $10-15 million in sales. Hungry yet?
Check out their following social media pages.