By: Maureen Farrell
When Fidel Castro seized his cattle ranches in 1966, Domingo Diaz fled to Atlanta, where he scraped together a living mopping floors as a janitor. Eventually he saved enough to buy a grocery store downtown, where he and his son, Julio, sold Cuban specialties. Over the next decade they added four more stores. It was a family affair: Julio’s son, Rene, learned math running the checkout counter, and at age 15 he learned to drive (and haggle) by going to the market to buy produce to stock the shelves.
Today Rene Diaz runs Diaz Foods, which generates $200 million in sales transporting mostly Hispanic food products to restaurants and grocery stores in 25 states. The Diaz family now includes 370 employees representing “every single Latin country,” crows Rene Diaz, 49. “At least ten couples have met here, gotten married and stayed at Diaz Foods. And I can’t even count how many family members work here.”
Minority entrepreneurs like Diaz are playing a bigger role in America’s growth story. In 2010 immigrants accounted for nearly 30% of new business owners, versus 13% in 1996, according to the Kauffman Foundation. Atlanta, with its sprawling suburbs and endless strip malls, is an especially active hive.
Since the 1980s Atlanta’s Hispanic population has swelled, drawn from recession-wracked places like Texas and California. The 1996 Summer Olympics brought more construction and service jobs to the city. In the last decade the city, where half the residents are African American, has attracted a host of Hispanic and Asian entrepreneurs, and now boasts the second-highest percentage of self-employed minorities among the top 52 metropolitan areas with populations greater than 1 million.
That combined with a growing population, increasing household incomes and affordable housing–puts Atlanta atop our list of best metro areas for minority entrepreneurs, cobbled together with help from economist-demographer Joel Kotkin, author of The Next Hundred Million: America in 2050.
Diaz’s market is vast–and expanding. Between 2000 and 2009 disposable income among U.S. Hispanics grew at an 8% clip, to nearly $1 trillion, versus 4.7% growth in overall GDP. Better yet, “Hispanics tend to buy from Hispanics,” says Luz Urrutia, president of El Banco de Nuestra Comunidad in Atlanta. Diaz has spent $250,000 on software to track purchasing trends and fields a team of six analysts to research new products appealing to a variety of cultures.
Mexicans, for example, tend to be brand loyalists, says Diaz. That’s why he struck an exclusive deal with Jarritos, a Mexican soda company, in 2008, which helped shore up sales in the latest downturn. “We were able to land customers who weren’t buying from us before,” says Liliana Bejarano, Diaz Foods’ vice president of business intelligence. The company now stocks seven different nectars, three of them (Sonrisa, Jumex and Boing) for customers hailing from different parts of Mexico. Diaz also ships five kinds of black beans.
“They’re the same black beans,” he says. “But Hispanics want their black beans.” (Colombians, on the other hand, couldn’t care less about labels. “If a Colombian company says they have the most famous rice, I’ll say: ‘What’s the price?'” quips Bejarano, who formerly worked for McKinsey in Colombia.)
Twenty years ago Diaz Foods had a tiny $25,000 line of credit. Each morning Diaz would call his local bank to find out how much his account was overdrawn and then ask his drivers to pick up money from customers and deposit cash somewhere along the route. Today that line is $11 million.
Diaz still lives on low-single-digit operating margins–an even tougher game when commodity prices spike. In the last few months gasoline jumped $1 to nearly $4 a gallon, adding $25,000 more to Diaz’s fuel bill every week. “We need to get more penetration into existing customers rather than knocking on doors of new ones,” he says.
Diaz says all his workers are legit and that most endure background checks. “There might be someone here who has fake paperwork,” admits CFO Eric Newberg, “but we can’t do anything more than follow the laws.” For extra measure last year Diaz hired a firm to conduct an I-9 employee-eligibility audit, just the second such review in the company’s history.
Visit Diaz’s 250,000-square-foot warehouse just west of downtown Atlanta and the beaming owner can barely contain his pride. Latin American artwork adorns the walls. Diaz’s employees have health insurance, access to an onsite gym (with yoga and Zumba classes), a 401(k) plan with matching contributions and subsidized lunch spreads five days a week, including strip steaks, paella and plantains.
Diaz insists relatives don’t get special treatment at the company. Nor, he adds, does he intend to walk away from what his grandfather started anytime soon: “I don’t run it like a family business, but I always want it to be a privately held business with family values.”