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CALIFORNIA / News and Insight on Business in the Golden
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Family Follows the Rules

September 09, 1998|KAREN E. KLEIN

Renato "Mingo" Lee and his four brothers grew up helping out in their parents' Shanghai Pine Gardens restaurant on Balboa Island. The entrepreneurial spirit rubbed off on three of the brothers, who now own a chain of nine fish taco restaurants in Southern California and two in Colorado and are in the midst of a franchising plan. But family conflicts at one point threatened to stop the growth of their company. Writing down a set of rules--and sticking to them--has proved crucial to moving the family-owned business forward, Mingo Lee said. He was interviewed by freelance writer Karen E. Klein.

My parents emigrated from mainland China to Brazil in the 1950s, where all five sons were born. In 1964, my dad and my oldest brother came to the U.S. and the rest of the family followed in 1975.

My parents put us all through school so we could get out of the restaurant business. My two older brothers did that, but the three younger ones came full-circle and got right back into restaurants.

We grew up at the beach and taking surfing excursions to Baja California. We all loved the food we got there, but we couldn't find that cuisine here, so we decided to open Wahoo's Fish Tacos in 1988.

When we first opened, we still had some guidance from our parents, who would serve as arbitrators along with our oldest brother, who was an attorney.

But our oldest brother passed away in 1993 and our parents got more used to the fact that they were retired. All of a sudden, we had nobody to be the "tie-breakers" when there was disagreement.

We spent two years in turmoil, with a lot of grief and arguments taking place over long nights. We had three restaurants and were getting ready to open two more, so we were outside our comfort zone. The stores were doing well and we wanted to keep expanding, but we saw the drain on our cash flow and we knew that some of the staff problems we'd been having would only increase as we opened more stores.

We had to decide about financing, franchising, whether to bring in additional partners and ultimately, whether to give up equity and control in the company to outsiders. Different opinions came from everybody around the table.

Because we're all family, there's no such thing as "majority rules." If somebody got out-voted, Thanksgiving dinner wouldn't be as much fun. In a family business, everybody can be brutally honest. Then also, in a family business, someone can always claim foul play, or recruit other family members into the argument or say things like, "You've had it out for me since I was 7 years old!"

Finally, we sat down over a year's time and documented--on paper--a book of rules for how we were going to work together. We got together for regular meetings, which we hadn't done before, and decided that we needed a vehicle for making decisions that included penalties for those who didn't follow it.

I didn't particularly like it when I was told I couldn't live by my instincts and just take the company in whatever direction I wanted it to go. But we had to make that hurdle before we could go forward.

We laid out a plan that takes us five years down the road and we also laid out an exit strategy so we're all moving toward the same place. We went through the process without any outside help. Because we were raised in the small-business environment, we had the instincts for it and we didn't like the idea of sitting down with a consultant who didn't know our family or our business.

We still operate under those rules we set up for ourselves. It doesn't mean that we don't get into heated discussions, but at least it means the discussions do eventually come to an end.

*

Karen E. Klein will be featured at The Times' Small Business Strategies Conference Oct. 17-18 at the Los Angeles Convention Center. If your business can provide a lesson to other entrepreneurs, contact Klein at the Los Angeles Times, 1333 S. Mayflower Ave., Suite 100, Monrovia, CA 91016 or e-mail her at kklein6349@aol.com. Include your name, address and telephone number.

MORE INSIDE: More small-business news, features appear on Pages D6, D8.

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At a Glance

* Company: Wahoo's Fish Tacos

* Owners: Renato "Mingo" Lee, Eduardo Lee, Wing Lam, Steve Karfaridis, Cindy Lee

* Nature of business: Mexican casual quick-service restaurant chain

* Location: Headquarters at 3518 Lake Center Drive, Unit C, Santa Ana 92704

* Founded: 1988

* Employees: 200

* Annual revenue: $9.5 million

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