For the past seven years, New Yorkers have flocked to Otto’s tacos with a yen for So-Cal Taqueria dishes, whose first location in the East Village caused a sensation with its coarsely ground tortillas, masa fries and spicy fillings. When the food blog Eater checked the place in 2013, it applauded the fare but remarked ominously: “The rent is undoubtedly stratospheric and we hope the new place … can make it.”
As it turned out, Otto’s gave it a try, opened three more doors in town, and did a brisk midday trade.
Then Covid-19 knocked.
Shortly after Mayor Bill de Blasio asked city employees to work from home in early March, Otto’s founder, Otto Cedeno, knew his burgeoning restaurant empire was in trouble.
“Our catering industry made up a large part of our sales,” Cedeno told Adweek. “When New York City canceled events and advised companies to work from home, that source of income practically disappeared. We knew that despite an increase in delivery and takeout, there was no way to make up for this loss of sales. “
A heartbroken Cedeno had no choice but to close his restaurants and he was hardly alone. Six months after the pandemic, the loss of dine-in and catering revenue had forced every sixth restaurant across the country to close, according to the National Restaurant Association.
The U.S. trading group predicts restaurants are expected to lose a total of $ 240 billion in 2020.
Fortunately for Cedeno, he found a second chance from an unlikely source – a rival restaurant.
Micha Magid was also a New York restaurateur who started out in the East Village. His brand, a barbecue place called Mighty Quinn’s, had its flagship store opened within a few blocks and months of Otto’s. “As new, young restaurateurs, we’ve known each other for a while,” said Magid. And as the pandemic continued to decrease its revenue, Cedeno and Magid not only talked, but also strategized. Eventually the brainstorming resulted in an unusual solution.
Magid restarted his online ordering system to take Otto’s take-away orders, then trained his chefs to prepare the menu items of the taqueria in Mighty Quinn’s kitchens. The adaptation made it possible for Otto’s – although there were no physical restaurants – to survive as a delivery business and of course as a brand. Magid’s arrangement was humanitarian, but it also benefited his concept. With reduced own capacity, a new stream of orders would provide Mighty Quinns with a much-needed additional stream of revenue stream.
“We wanted to find a way to both use the kitchen capacity of our own restaurants and bring back those amazing street tacos that Otto brought to town,” said Magid. “Both missions came up with the idea of only working digitally.”
Instead of sharing the meal cards with his partner, Magid worked out a license agreement with Cedeno. Mighty Quinn’s performs the operation and takes the payments, while Otto’s receives a fee for using his name and menu.
“What they’re doing is very smart,” noted Gary Stibel, Founder and CEO of New England Consulting Group. “As restaurateurs find that they have more production capacity than orders and guests, there is an opportunity for them to combine and share resources. It’s entrepreneurial, it’s creative – and it’s happening on a much larger scale. “