Tortilla Flat

Last year Houston’s Ninfa Laurenzo saw her venerable restaurant chain go bankrupt. Will new ownership be a recipe for success?

Few restaurant chains in Texas are as storied as Ninfa’s. When her husband died suddenly of a cerebral hemorrhage in 1969, Ninfa Laurenzo found herself with the family tortilla factory to run and five children to support. To supplement her income, she gathered up some pots and pans from her kitchen and in 1973 opened Ninfa’s, a ten-table Mexican food restaurant in the front room of the factory on Navigation Boulevard, in Houston’s east side barrio. By 1995 Ninfa’s owned or licensed more than 35 restaurants around the state and in Louisiana. Ninfa herself had come to symbolize the Hispanic success story, greeting the pope in Puerto Rico as a U.S. goodwill ambassador in 1986 and nominating George Bush for president at the Republican National Convention in 1988.

But what seemed to be an entrepreneurial success story was really a troubled business. In October 1996 Ninfa’s was forced into involuntary bankruptcy by its primary food suppliers in Houston, Sysco Food Services and Southern Produce. At press time, the company was in the process of being sold to the Serranos Group, which owns the Austin-based Serranos Café and Cantina Mexican-restaurant chain, and its partner, Houston investor Niel Morgan.

How did Ninfa’s run into trouble? Like many small companies that find themselves with a hot product or concept, Ninfa’s bit off more than it could chew. To fuel its expansion, it borrowed too much money at high interest rates. To pay the interest on the debt, the company tried to generate more sales by opening more restaurants and diversifying into different restaurant concepts, for which it had to borrow even more money. Eventually, the hole Ninfa’s dug for itself became so deep, there was no way it could climb out. Along the way, Ninfa’s food began to suffer, making the chain vulnerable to competition. “It got tired,” says Phil Romano, a Texas restaurant entrepreneur who has launched such successful chains as Fuddruckers, Romano’s Macaroni Grill, and most recently, the take-out restaurant Eatzi’s. “People want something different, something they haven’t seen or tasted before, not the same old Ninfa’s.”

Ninfa Laurenzo didn’t set out to be a restaurateur. But after her husband died, the family tortilla business faltered, and the regulatory agencies were on her back to modernize. In 1972 her eldest son, Roland, who was fresh out of broker training at Merrill Lynch in New York and selling stocks from its Corpus Christi office, came back to Houston to help save the family business. Ninfa thought that opening a restaurant could bring in more revenue. “I thought if I opened a little taco stand, I would survive and support my kids and keep them together,” she says.

So, with only $16 in her pocket, Ninfa mortgaged her house, borrowed equipment from a vendor and $5,000 from a friend, and in June 1973 opened her little restaurant. It was slow going at first, and a few months after opening, a taco-shell machine that was accidentally left on nearly burned down the restaurant. With no money and no insurance—she had let it lapse because she couldn’t afford the premiums—it was one of Ninfa’s worst moments. “We sat in the living room and cried,” she says. “But I said, ‘Look kids, the Good Lord knows why he does these things—so we can draw some more strength. So tomorrow, we get up and we repair everything ourselves.’”

Within days, the restaurant reopened, and by and by, through word of mouth, the food—specialties included an addictive creamy green salsa, sizzling beef and chicken fajitas, and tacos à la Ninfa, soft flour tortillas bursting with flavorful grilled meat—began to catch on. It was far more authentic and homey than the No. 2 dinners Texans were used to. And the fact that Ninfa’s was a hole-in-the-wall in a rough part of

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