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Sun, Nov 16, 2003 - Page 12 News List

Brazilian's bet on beef pays off

Four former waiters struck gold after pooling their savings to start a chain of politically incorrect steakhouses


Coser's partners in Fogo de Chao are his brother Arri and the brothers Jorge and Aleixo Ongaratto. The two sets of brothers met in the 1970s, as teenage waiters at a churrascaria in Rio de Janeiro. The four pooled their savings to open a restaurant in their native Rio Grande do Sul, the southern Brazilian state where gauchos once roamed, and later started two restaurants in Sao Paulo before setting their sights on the US.

Texas seemed a good place to start, Coser said, especially after the first President Bush dined at one of their Sao Paulo restaurants in 1995 and suggested that an unlimited-meat menu might do well in Texas. They chose Dallas for their first foray after meeting Lawrence Johnson, a lawyer at Baker & McKenzie in Dallas who is fluent in Portuguese.

"Brazil has traditionally not been an exporter of services but of agricultural commodities and some industrial products," Johnson said. "I saw this venture as an opportunity to change that in a big way."

Coser says he and his partners financed their international expansion through savings rather than debt, taking advantage of a rare period in the mid-1990s when the Brazilian currency was strong against the dollar. Just as fortuitously, US beef consumption reversed a 17-year decline a year after the Dallas restaurant's opening in 1997 and has been growing ever since by an average of 3.5 percent a year, according to HedgersEdge.com, a livestock analysis company based in Denver.

The soaring demand for beef, however, has been a mixed blessing for Fogo de Chao. Beef prices have surged this year, to record highs. Selma Oliveira, Fogo de Chao's chief of operations, said the company had been hesitant to pass on the entire cost to customers.

Inevitably, competitors are already challenging it at the luxury end of the churrascaria market. International Restaurant Concepts of Lakewood, Colorado, for example, plans to open a churrascaria in Houston early next year called Avenida Paulista, designed to capture Sao Paulo's image as a financial center.

In New York, Joao de Matos, an owner of Churrascaria Plataforma, says his restaurant goes even farther than Fogo de Chao in recreating the Brazilian churrascaria atmosphere. Plataforma serves sushi and other seafood at his salad bar, as do many churrascarias in Brazil, he says, and it has kept roasted chicken hearts on its menu, an item that Fogo de Chao dropped because American diners didn't like it.

"Fogo de Chao is an impressive company, but I think there is a need to be very careful now that the concept is becoming popular," said de Matos, a Sao Paulo native who opened Plataforma in 1996, a year before Fogo de Chao started in Dallas. "There's no room in a big city for more than one or two good churrascarias."

And is there room in the market for two whose names begin with "Fogo"?

Anthony Grandinette, a lawyer for Fogo e Brasa, a churrascaria based in Phoenix, has accused Fogo de Chao of trying to intimidate his client by filing a trademark-infringement lawsuit over the summer. In the complaint, Fogo de Chao, which means "fire on the ground" in Portuguese, said Fogo e Brasa, which translates as "fire and coal," had borrowed too freely from its name and business practices.

"They're flexing their muscle," said Grandinette, speaking for Fogo e Brasa, which is operated by Israeli immigrants. "They want to shut my client down."

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