Waiter becomes restaurant owner, then tech entrepreneur

INSPIRING PERSPECTIVES

Each Sunday, the AJC brings you insights from metro Atlanta’s leaders and entrepreneurs. Matt Kempner’s “Secrets of Success” shares the vision and realities of entrepreneurs who started their dreams from scratch. The column alternates with Henry Unger’s “5 Questions for the Boss,” which reveals the lessons learned by CEOs of the area’s major companies and organizations.

Find previous columns from Unger and Kempner on our premium website for subscribers at www.myajc.com/business.

Hevia’s tips:

— As an entrepreneur, be prepared to go years without making much money.

— Be OK with making mistakes. Learn fast from them.

— Know your limits. Get expert help.

Draftserv Technologies and Cheeky

Based in Suwanee.

Jose Hevia, 47-year-old CEO and founder of both.

He and his wife have three children.

Annual revenue: Cheeky — about $6 million in 2013, projecting $6.3 million this year. Draftserv — $175,000 in 2013, projecting $1.3 million this year.

Profit margin: Cheeky has about 10 percent. Draftserv loses money.

Business: Cheeky has three restaurants (Suwanee, Cumming, East Cobb). Bar areas include option for customers to pour their own beer at taps on tables or from a wall unit that shows how much they’ve poured. Draftserv is a beverage dispensing technology company that produces tap units and software that tracks and controls use of the system.

Staff: Cheeky: 150 employees; Draftserv: five including Hevia.

Ownership: Hevia owns 100 percent of Cheeky and 60 percent of Draftserv. Private investors bought 40 percent of Draftserv for about $1 million.

Hevia’s pay: “North of $100,000.” He works about 70 hours a week.

“I wanted to go from nothing to something. Then, the only way to do that was like going to a blackjack table and doubling down over and over again.”

“The self doubt was tremendous.”

“I didn’t realize it at that point, but I was betting the whole company on that event… Will it work or will it fall on its face?”

Jose Hevia began his career as a waiter. He became a restaurant owner in the Taco Mac chain and eventually launched his own small chain of restaurants called Cheeky, nicknamed after his dad. But it wasn’t until Hevia was in his 40s that he made an abrupt jump into technology.

Now, at 47, most of Hevia’s time is spent expanding on an idea he first saw in Spain: self-serve draft beer taps at restaurant tables. Hevia tried it at his first Cheeky restaurant. Now, he has a five-person company, Suwanee-based Draftserv Technologies, focused on growing the concept.

He makes units that can be installed at bar tables and walls or go mobile and be wheeled like big jukeboxes into stadiums, cruise ships or other spaces. Consumers tap a card to the unit, allowing them to pour their own beer from metered taps. They can get less than a glassful and sample different brands. Software keeps track of purchases and limits how much they pour over time. Hevia snared attention after stationing units at the last Major League Baseball All-Star Game.

I’ve always been entrepreneurial. My college roommate and I bought liquor bottles, and before fraternity parties we would open up our bar in our room and play music and sell drinks for a dollar a piece to all the fraternity brothers and their dates. Of course, it ended after a few months. My parents were not happy at all about it.

While majoring in international business at Auburn University, he and his roommate worked weekends as waiters at Taco Mac restaurants in metro Atlanta. Hevia dropped out of college halfway through his senior year.

I was anxious to start working full time. A really terrible decision but (it) was always a huge motivation for me to succeed as an entrepreneur. I didn’t have a degree to fall back on.

When we got out of school we thought we would interview and get real jobs. But we just kept being waiters. Then we were promoted to managers. At 23 we wanted to own restaurants. We went on to become (Taco Mac) licensees.

I had to get an SBA (Small Business Administration) loan for $150,000. I have no idea how I qualified for it. I had a partner. He put money in. We were underfunded.

I made my living through tips working behind the bar and a little bit of salary I could take here and there as the owner. But there was no profit. When you go on your own you have to be OK with not making (real) money for probably years at a time.

I think we averaged around $1 million in sales a year, which sounds like a lot. But when you are done paying taxes and payroll and rent and everything else, there wasn’t a lot left. Especially when we were paying down debt. But then I borrowed more to open another store.

I wanted to go from nothing to something. Then, the only way to do that was like going to a blackjack table and doubling down over and over again.

The reasons banks don’t like restaurants: I need all this money up front. I have to anticipate the 10-year curve ahead of me. I have to financially take the risk, and everything I bought is at best worth 20 cents on the dollar on the resale market.

In restaurants, if you are not growing (new locations), you are going backwards. It’s like diversifying your portfolio.

Eventually he was a part owner of three Taco Macs in Gwinnett County, with the operational management largely handled by others even as he made well over $100,000 a year.

I thought: I want to do a restaurant (Cheeky) on my own.

On a visit to Spain, Hevia’s cousins took him to a bar where customers paid a flat fee to drink all the beer they wanted from self-serve taps at their tables.

I thought it was the coolest thing. Why don’t I do beer tables at Cheeky? The whole nine-hour flight back was me trying to lay out how I would do a beer table.

I needed to meter the beer, and I needed (software) to display the ounces per table on screens. I got online to find people I thought could write the software. They charged me about $10,000.

It worked. It put Cheeky on the map. It created a buzz about the new concept.

They were in controlled, bar areas where customers were checked to make sure they were of age. But Hevia had run into another kind of trouble while building the first Cheeky in 2007, just as the economy tumbled.

I had lined up a loan. Four weeks into construction, I went to the bank to start taking draws to pay for the construction. They said, we are not going to be able to do this loan. In fact we are not doing any loans right now.

I put every penny I had into getting to opening day. There were still companies I owed money to. I had to say I will pay you each week as the money comes in. The first year and a half, we were barely making it.

He sold his stake in one of the Taco Macs to keep Cheeky alive. Eventually he sold his stake in the other two as well.

A developer friend of mine who came into Cheeky a lot was a leasing manager. He offered me a very attractive deal. We barely had any money. It was a chance to get in an A+ location (in Cumming) at a very discounted rate.

At the new restaurant he designed larger tables with more taps. He had engineers design a wall dispensing system that would allow customers to tap a card issued by the merchant to get access.

Other restaurants wanted the technology. I had to form a company (Draftserv) a bit on the fly to deal with that.

A neighbor sold software to Carnival Cruise Lines. One night over beer he said, “Could you do this on cruise ships?” I said, “Absolutely.” I said it would be really cool if you could put it on your room key and get beer around the ship, and it would put it on your bill for you. He called his contacts at Carnival.

In preparing a system for Carnival, Draftserv developed the idea of mobile units that could handle different drinks and be transported to a variety of settings. A major concessions company wanted to try the system over several days at the MLB All-Star game. The concessionaire put out a press release, which landed coverage from ESPN and other media outlets.

I didn’t realize it at that point, but I was betting the whole company on that event. All the major concessionaires and beer companies were there.

Sales were tremendous. We far exceeded any expectations. The concessionaire said they would like to see about $2,000 in sales out of our kiosks on the first day. We did $18,200. We outsold every kiosk in the stadium.

We are now working with all the major concessionaires. We have less than 100 systems in the world. We have orders for over 250 now on the books.

One of our biggest fears is too rapid growth. Starting a tech company is all new to me. Every time you make a mistake, you lose money. I was very naive. Software requires constant attention. I thought you just write code once and you are done.

It's been really great to reinvent myself. But it's also been really difficult. All I've done is restaurants for 25 years in one little market. Now, I have clients in Mumbai and Delhi and Singapore and Thailand and the U.K. and clients on cruise ships.

We hire more people. We spend more money on engineering. I’m four years in; I haven’t made a penny. If I didn’t have my restaurants and what I built up in the past, Draftserv probably couldn’t make it. If you are afraid to fail, you’ll never do anything.