INSIDE DISH: Mexican mainstay puts second spot on front burner

Welcome back to IBJ’s video feature “Inside Dish: The Business of Running Restaurants.”

Our subject this week is the north-side Mexican eatery La Margarita, which after 25 years in business will finally open its second location. It’s a significant milestone for owner Lori Rangel-Grubbs, who will hand managerial duties for the new Fountain Square locale to her 23-year-old son, Jon Carlos. He was born soon after Lori and her late husband, Larry Rangel, opened La Margarita in 1986 in Speedway.

“Everything has come together at one time,” said Rangel-Grubbs. “The location and culture down there in Fountain Square are perfect for what we want to do. The second thing is that my son Jon has just graduated from college and wants to step into the restaurant business, so I’m helping him get started.”

The new restaurant, to be named La Margarita Fountain Square, will be situated on the northwest end of the Murphy Art Center Building at 1043 Virginia Ave. The 2,800-square-foot locale will require about $125,000 in startup capital, Rangel-Grubbs said. Specializing in high-end tequilas, the eatery will include a 40-seat outdoor "Tequila Garden" alongside the adjacent Cultural Trail. The menu will mirror the tried-and-true offerings at the current La Margarita, located at 9435 N. Meridian St.

The menu was developed by Larry Rangel, who served as chef at the Broad Ripple eatery El Matador during the 1980s. A native of Mexico, Rangel had no formal culinary training and relied on a strong creative streak.

“He was really an artist,” Rangel-Grubbs said. “He used cooking to do his artwork. He would take sauces and recipes that he had grown up with from his mom and his aunts and just change them. He started with the sauce bases. We have four or five really unique sauce bases that we use. And we do mixtures of them or add things to them for most all of our dishes.”

Wanting to branch off on his own, Rangel opened the Speedway location in 1986. To help make ends meet during the early lean years, wife Lori earned an associate’s degree in nursing and began working as a labor-and-delivery nurse. She often took weekend shifts at the hospital, allowing her to work during the week at La Margarita.

Although May was a hot month for the restaurant, sales during the rest of the year lagged. So, the Rangels moved the eatery to a new locale at 86th Street and Township Line Road in 1990. La Margarita established itself with a strong dinner crowd, but a family tragedy in 2000 shook its foundations.

A devoted racing fan, Rangel had forged a strong friendship with CART team owner and former driver Tony Bettenhausen Jr. and his wife, Shirley. They were returning from an event in Florida in the Bettenhausens’ Beech Baron twin-engine aircraft when icing on the wings caused it to crash in the hills of Kentucky, killing them and a fourth passenger, Russ Roberts.

After getting over the initial shock of losing both her husband and two close friends, Rangel-Grubbs faced a fateful decision.

“I was torn between, ‘OK, this is my chance to get out of the restaurant business—that I never really wanted to be in anyway—and just be a nurse and take care of my family,’” she said. “But it’s funny. I became more committed to the restaurant after Larry died because I believed so much in it. Our food is so good. Larry was so passionate about it, and I wanted it to go on.”

She invested about $75,000 from an insurance settlement to remodel the restaurant in 2001. In 2006, slipping sales convinced her to move the restaurant for the second time, taking a 4,000-square-foot space in a strip center south of 96th and Meridian streets.

“This location has been really good for us,” she said. “When we moved from 86th and Township Line Road, we had our same following of dinner clients. But over here we built a lunch following. That has helped a lot.”

In the Fountain Square spot, Rangel-Grubbs will employ a financing strategy that has helped La Margarita take root in other locations. The owners of the space, Craig Von Deylen and Larry Jones, will cover about $25,000 of the buildout costs and then amortize the expense in La Margarita’s lease. The owner of the Meridian location, Landmark Properties Inc., forwarded $60,000 for the buildout of that restaurant in a similar arrangement.

“They see and believe enough in my product and my longevity that they are willing to invest in the buildout for me—the place where otherwise I don’t have the financial backing—so I can get open,” Rangel-Grubbs said. “Once I get my doors open, we’re OK. I pay for it ultimately through my lease."

In the video at top, Rangel-Grubbs describes the origins of La Margarita, how she decided to continue running the restaurant after her husband’s death, and her approach to the new location in Fountain Square. In the video below, she discusses her dual career as a labor-and-delivery nurse, as well as what she’s learned over 25 years in the restaurant business.

La Margarita 9435 N. Meridian St. (317) 848-1457 www.lamargaritaindy.com Concept: Casual-to-upscale Mexican restaurant with traditional menu items as well as original recipes from founder Larry Rangel Founded: July 2, 1986 Owner: Lori Rangel-Grubbs Startup costs: $600 for the original location in Speedway at 30th Street and Georgetown Road, which formerly housed an Asian grocery. Subsequent location at 86th Street and Township Line Road (1990) required $75,000 investment, followed by a $75,000 remodeling in 2000. Current location (2006) required $85,000 investment ($60,000 buildout and $25,000 for other expenses). Gross sales/net income: $681,000/$4,000 (2009); $641,000/ $20,000 (2010). Seating: 125 interior seats; 40 on patio. Employees: 15 (4 cooks,1 dishwasher, 1 manager, 1 hostess and 8 waiters). Goals: To open a new, 2,800-square-foot location in Fountain Square's Murphy Art Center late this summer.