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Next Life

Roger Duarte, Miami's King Crab

“I didn’t feel I was going to grow at an investment bank. ... It was my turn to start my own business”Photograph by Emiliano Granado“I didn’t feel I was going to grow at an investment bank. ... It was my turn to start my own business”

Roger Duarte darts his new Mercedes through Miami traffic at frightening speeds. Still hurting from the previous night’s partying, he parks in the downtown warehouse district and walks past some prostitutes and fenced-in pit bulls before opening the gate to the office of George Stone Crab, of which he’s founder and president. He greets Wesley Inigo, whom Duarte first hired as a crab cracker before firing him. (For each position, Duarte hires two people and fires one two weeks later.) He wound up hiring Inigo back, eventually putting him in charge of customer service. Taped up to the wall above Duarte’s desk is a New York Times business article with the headline, “Fire Your Relatives, Scare Your Employees, and Stop Whining.”

“It’s all about the hustle. Miami’s a good place to open a business, because everyone here is f-‍-‍-ing lazy,” says Duarte of the success of his stone crab delivery service. Stone crabs are found from the East Coast of the U.S. to the Caribbean, but they’re primarily harvested in Florida. People love them for their delicious claws. From its tiny office, George Stone Crab sells about $10,000 worth of claws a day during the May-to-October stone crab season, packing them with frozen gel packs, a hammer, and some mustard sauce, and delivering them in Mini Coopers emblazoned with the company logo. Duarte estimates the company, making $20 to $25 profit per pound sold, will top more than $3 million in revenue this season, beating last year’s mark of $2.4 million.

Florida requires a stone crab claw to be 2.75 inches long to be ­harvestedPhotograph by Emiliano Granado for Bloomberg BusinessweekFlorida requires a stone crab claw to be 2.75 inches long to be ­harvested

A 29-year-old former investment banker, Duarte is part of a generation of young men who got into I-banking for the glamour—and, of course, the money—but, post-2008, found themselves in an uncool industry in which they’d never make as much as their bosses or have half as much fun. “I didn’t feel I was going to grow at an investment bank, and I wasn’t interested in getting an MBA. It was my turn to start my own business,” says Duarte. A rich kid from Monterrey, Mexico (his dad was president of Carrier Air Conditioners (UTX) for Latin America), Duarte made money in high school by selling South American cigars to his dad’s friends. He promoted clubs in Boston while a student at Suffolk University and then worked as an investment banking peon for Pan American Finance.

In 2008, on a trip back from a deal he was working on in Peru, Duarte read a story in an airline magazine about the top-grossing restaurants in the country. He noticed Joe’s Stone Crab was No. 3, and its Chicago and Las Vegas branches weren’t far behind. Even though he had no interest in the food industry, delivering stone crabs directly to customers fit his criteria for starting a business (Duarte reads a lot of business books). He wanted a “blue ocean strategy,” to be alone in a small market within a much bigger one, like Chobani did with Greek yogurt. He wanted a low capital investment—like a day trader, he could sell all his crabs by the end of the day. He also wanted something with a lot of cash flow. And since food vendors don’t pay their suppliers for 60 days, he figured he could build a pile of cash to invest with.

Duarte’s deliveries come packed with mustard and a hammerPhotograph by Emiliano Granado for Bloomberg BusinessweekDuarte’s deliveries come packed with mustard and a hammer

There are only three big Miami-area suppliers in the tiny stone crab business. Two are owned by Joe’s. So Duarte started in 2009 by buying a hundred pounds of crabs from the third, D&D Seafood in Marathon, about two-and-a-half hours south of Miami. Duarte made a few George Stone Crab T-shirts, printed flyers, and took his parents’ gardener with him to deliver stone crabs on weekends, charging 60 percent less than Joe’s market price, which ranges from $40 to $80 a pound. He says he named the company George because Roger didn’t sound American enough. He eventually admits, “I called it George’s because it sounded like Joe’s, and people get confused.” Before Duarte made his first delivery, he was about $8,000 in the red. “People have good ideas, but they never execute. The way I work is that I spend money upfront so that I’m forced to earn it back,” he says.

After a few months of making about $1,000 a day on weekend deliveries, Duarte became friendly enough with the owners of D&D, Mario and Dennis Dopico, to ask them to team up. They went for it. He raised $200,000 in capital from his delivery clients and made the money to pay back that initial investment in nine weeks.

The D&D Seafood team in MarathonPhotograph by Emiliano Granado for Bloomberg BusinessweekThe D&D Seafood team in Marathon

From the balcony of his 10th-floor apartment in Miami Beach, Duarte, dressed in a monogrammed shirt and designer jeans, points to Joe’s Stone Crab, his 100-year-old rival. He got the apartment, he says, so he could remind himself daily of his inspiration. “If it weren’t for Joe’s, I wouldn’t have a business,” he says. “I milk the tit out of Joe’s.” Joe’s co-owner Stephen Sawitz isn’t bothered by that. “I think he’s neat. He sent my mom flowers on opening day of the season,” says Sawitz. “He found a niche in Miami that was welcomed. If I didn’t have easy access to Joe’s, I might even get George delivered.”

Although he’d left finance behind, Duarte found himself fielding offers from private equity. In 2010 a group looking to acquire a 30 percent stake in the company valued George Stone Crab at $4.2 million. Since then it’s gotten significantly bigger. George has been a part of South Beach and New York City food and wine shows and became the first food sold at online shopping site Gilt. “The markets that are doing very well right now in seafood are the high-end markets,” says Joseph Sabbagh, president of seafood consultant Sax Maritime Associates. While seafood consumption has been declining in the U.S. since 2006, to 15.8 pounds per person per year (compared with 75 pounds of chicken), stores such as Whole Foods (WFM), Wegmans, and Costco (COST) have increased their high-end seafood sales.

And stone crabs are an international hit. After his uncle impressed guests with his nephew’s crabs at a wedding in Guatemala, Duarte started taking two suitcases—100 pounds—of stone crabs to the country on two round-trip commercial flights each week. “I was trafficking stone crabs,” Duarte says. Then he got caught by a customs official. “I said, ‘This is for a wedding. You definitely do not want this guy not to get his stone crabs.’ ” Now he legally ships to Mexico, Guatemala, Honduras, and Brazil; he’s the largest seller of stone crabs in Latin America.

Still, he’s just getting his sea legs. Standing on a small boat, 30 minutes out at sea, Duarte opens up a trap and pulls out a large crab. He twists off the claws and throws it back—a double-amputee crab has a 53 percent chance of surviving and regrowing its claws. But Duarte’s won’t make it because of the way he snapped the claws off, says one of the D&D Seafood fisherman aboard.

Most stone crabs will regrow their claws after they’re thrown backPhotograph by Emiliano Granado for Bloomberg BusinessweekMost stone crabs will regrow their claws after they’re thrown back

Duarte’s current project is My Ceviche, a restaurant chain that serves bowls of marinated octopus, fish, and shrimp for $12 to $17. He started it last year with 29-year-old chef Sam Gorenstein, whom he met at the South Beach Wine & Food Festival. Duarte is so committed to trust and relationships that he didn’t even bother trying Gorenstein’s ceviche until four days before they opened the first restaurant in March 2012. That test store, in a tiny kitchen attached to a youth hostel in Miami Beach, brought in $1 million in sales in the first year—about 50 percent more than Duarte predicted. A second My Ceviche is set to open in the next few weeks, and he plans to open two more at the Miami International Airport and another in New York before franchising. Each My Ceviche will serve as a delivery point for George Stone Crab. While he expands, he’s putting his retired dad in charge of the restaurants, ignoring the Times’s advice to “Fire your relatives.”

If My Ceviche takes off, Duarte hopes to exit the food industry. “My goal is commercial real estate,” he says. For now he’s busy creating businesses and taking diving lessons, which he hopes will lead to new vacations. Even if it doesn’t, he’ll make the classes worth it. “If I can bet five people $200 that I can hold my breath for three minutes,” he says, “I can pay back the $350 for the class and make $650.”

Duarte gives a wave from his new MercedesPhotograph by Emiliano Granado for Bloomberg BusinessweekDuarte gives a wave from his new Mercedes

Stein is a Bloomberg Businessweek contributor.

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