“I read the news today… oh boy”
– John Lennon
Yesterday the Boston Globe shared the story that two of our locations at Boloco have closed. The online publication Eater had posted something similar the day before which I had missed. No details on the closings were shared; no attempts to reach me for comment or explanation were made. Now, of course, we’re getting hit with questions and web comments from many directions. So I thought I’d get the more complete story into the logbooks for the few who might actually be interested. Perhaps it’s a bit long, but it’s the whole truth as seen from my eyes. I’ll leave it to others to print shortened versions of what follows if they choose.
It was 3:53pm on June 4, 2015. I was navigating a friend’s Jeep through downtown Nantucket when I felt my iPhone buzz. I pulled over, grabbed my phone and snapped a photo of the cobblestone road I was traversing. I was headed to the Nantucket Conference where I would be interviewing Cape Air founder and CEO Dan Wolf in front of a mostly technology-focused crowd. And although I had loved my 20-month hiatus from Boloco — having developed an app that would surely change the world, become an Uber driver, an expert drone pilot, an aspiring writer, all while moving my family to Costa Rica for a month before moving to Vermont permanently — I knew that what awaited for me on my phone was a most important text. I took the picture to capture the moment.
“Deal done, you can wire the money,” wrote my Goodwin Procter attorney, culminating the end of a long 8-month battle to repurchase Boloco at terms I could stomach but also before the company decided to file Chapter 11, a likely scenario given the additional debt and losses that had piled up since my departure. I left the company in a well-documented standoff in October 2013 between the majority owners of Boloco at the time and a new financial partner who was on the 1-yard line of placing a $15 million bet on the further growth of our business from 22 to 60 restaurants by 2016. When my own controlling board members blocked the deal, I was so sure it was the wrong move that I threatened to leave the company. A few days later, to my surprise, they accepted my resignation and I was out. A lot of people have heard rumors that I was kicked out, ousted, etc. At first I made sure people knew I had been the one to resign. But in truth, even though I had been one of the founders, they didn’t want me running their business anymore.
Less than a year later things had become quite challenging for Boloco. Lots of manager turnover, struggling sales, cultural confusion, and our newest locations in the DC area were on the verge of collapse. Sometime in the fall of 2014 I learned that the owners of Boloco, the same ones who blocked the $15M deal in 2013, were now preparing to sell the company… but at a value less than half of what it was when I left. As it turned out, no intelligent buyer would have touched it. And it also turned out I had access to the same kind of blocking right as they themselves had used in 2013, and through my attorneys made it clear that I would use it if necessary. I could not knowingly allow the company to sell at a value that would wipe out nearly 18 years of hard work and leave shareholders and team members of over a decade, including myself, with nothing to show for any of it.
In the end, I was the buyer. The only one who could fathom putting good money after bad into something so impaired. I thought about the risks every day from February until June, negotiating accordingly, and walked away from doing the deal numerous times. Despite my love for the brand I had led for so long, many of its people, and what Boloco stood for, I didn’t want to commit financial suicide. In May, my attorneys even urged me to pause for a weekend and consider walking away once and for all and waiting for the company to file bankruptcy. “Let them deal with the mess that has been made,” they suggested wisely, “and then if you decide you want to you can come in and buy the pieces back.” I couldn’t do it. I didn’t want to see it fail. I didn’t want to see Boloco added to the list of companies that use bankruptcy as a tool to avoid its obligations.
When it came time to take control of the company in June 4, 2015 as I bumped along the cobblestoned road in Nantucket, I didn’t have to pay much… at first. With critical support from our largest food distribution partner, Reinhart Food Service (formerly Agar), and large concessions from the sellers who just wanted to get out, the balance sheet was dramatically and magically improved minutes after the deal closed. But the days and weeks that followed felt like the business equivalent of hiding in the London tunnels during World War II and wondering when the next bomb would hit and would it be the one that ended everything. Even the State of Massachusetts showed up unexpectedly and suddenly mere weeks after rebuying Boloco, levying our accounts at Bank of America and swiftly removing over $300,000 in unpaid meals taxes (sales taxes) that I had previously been assured were under a 2-year payment plan.
This past summer was a series of painful bumps and bruises that caused me to dig deeper into my own financial coffers than I would have ever imagined possible. Ultimately I was forced to seek some outside financial assistance from friends and family to keep up with the financial chaos — something I had originally committed to myself I would not do under any circumstances. If you haven’t put everything at risk before, I would suggest you avoid it if at all possible. It colors your world in a way that can’t really be described. The colors aren’t beautiful, I’ll put it that way. The accompanying behavior and decision-making can be irrational. In my earlier years, this kind of risk aged me more quickly than would have otherwise been the case. More recently, I credit my commitment to meditation, yoga, regular exercise, and an incredible wife and kids for getting me through these last few months without going postal.
As the dust began to settle towards the end of summer, I realized that it was time to make some hard decisions on some of our restaurants. Of the 20 that remained open when I took over, two had leases that were ending soon and weren’t performing well… as such, the former team prior to my repurchase decided to let the leases lapse. I was fine with those decisions. So, after 15 and 12 years, respectively, we shut Newbury Street in June and Pearl Street in September, for good. So many amazing memories… especially knowing Tom Brady and Tom Cruise and a million other less famous Toms had sat on our Newbury patio enjoying a Teriyaki or Classic burrito. Newbury Street was once one of our very best performers — only when we opened a much larger location at Copley a couple of blocks away did Newbury stumble. It was the right move then and still is now… no regrets.
But harder decisions lay ahead. Of the 18 locations now in play, at least three were losing significant amounts of money. I knew then, as I know now, that for the sake of a healthy future at Boloco I had to find better options for these. In addition, some of our successful restaurants, not surprisingly, are in super desirable locations. There also happen to be many hot concepts trying to enter the Boston market… perhaps in the right financial circumstances, I thought, it was time for them to take their turn in some of our “redundant” locations and in the meantime help Boloco restore its financial stability.
One such location is School Street. Actually quite successful over the nearly 7 years since we opened it, I was speaking with the CEO of another local concept who is also a friend, and he had interest in buying the assets of School Street and taking over. With cash continuing to be a weekly concern, it only made sense to take him up on his offer and we came to an agreement quickly. Months passed unfortunately as they dealt with permitting discovery, landlord renegotiations, architects, and numerous other hurdles required to open, but finally it all came together in late October. As such, Boloco School Street closed its doors on October 26 and began making way for an exciting addition to the neighborhood who will make many improvements in the months to come. Most of our team members were transferred to other nearby restaurants, two of which are mere blocks away and another handful of locations a 10 minute walk or less.
While I was away from the business, I was sad that Boloco began to struggle so badly. It didn’t have to be this way. But I’ve moved on from worrying about it as has our lean and mean team of entrepreneurs… yes, we are instilling a new entrepreneurial mindset throughout the entire 350-person company to carry us into 2016 and beyond. We are maniacally focused on rebuilding the culture of respect, positivity, humor and light-heartedness that brought us so far. Our menus are pretty complex these days and confuse even our most experienced customers. We should probably simplify them, and as the New Year approaches we will. Thankfully thousands of people continue to love the high quality, responsibly sourced food we serve, but the competition is stronger and more diverse than ever, and to stay relevant we need to innovate and improve constantly. Our bowls and burritos must be more delicious than ever before. Finally, we have to go bigger than ever on fulfilling our mission to positively impact the lives and futures of our people through bold and inspired food and practices… and we will. I gave a TEDx talk during my 20-month hiatus on the business case for paying higher wages, and I am committed to walking the walk, not just talking the talk. There’s room for more good companies out there, we have to remain one of them. Perhaps even become one of the best again.
In the coming months there will be changes that may not always be popular. A few more restaurants may close. Haters will carry on, especially in the online chat rooms, as they always do. That’s fine. But the good news, and our focus, is that we have over 350 passionate committed team members and no less than 15 restaurants that either do very well now or will do well again with a new level of operational TLC.
On a personal level, I’m excited again. And, in a twist of fate, unlike any previous time, I own most of this thing… I have no Board of Directors, no institutional investors, no handcuffs on doing what’s right for our customers, our team, our food partners, or even our shareholders. Yes, as I write this bullets are still flying in my direction based on the lingering effects of poor execution and questionable decision-making, but that, too, will pass. And, hopefully, that’s when the fun returns. In the meantime, the smiles at Boloco are back… the heart and soul of the place is reemerging in nearly all of our restaurants. Optimism is building. We remind ourselves daily that anything we set our minds and hearts to is possible.
As we all aspire to find meaning in our own lives, so does a simple burrito aspire to matter, to make a difference, and to help others’ lives. So that’s what we are going to do. Stay tuned, stay in touch, and thank you for supporting all of us at Boloco.
CEO & Co-Founder