Co-founder John Pepper said that using different LLCs for different locations has allowed him to protect the burrito restaurant’s Hanover storefront.

By Kelly Burch, Granite State News Collaborative

John Pepper, co-founder at Boloco, is used to the ups and downs of business. He started the burrito chain in 1997 when he was a student at the Tuck School Of Business at Dartmouth College. He left the business in 2013 after a falling out with investors, but bought it back in 2015 when, he says, the business was “in shambles.” 

“I wasn’t confident that I would turn the company around,” Pepper said. 

At that point, Boloco had locations in Boston that were on the brink of bankruptcy. Its Hanover location, however, was thriving, so Pepper decided to separate the New Hampshire location from the Massachusetts stores, making them different business entities that shared the same name. 

While the Boston locations stumbled along, Hanover ran, serving up to 500 customers a day. 

“Sometimes I’m like, ‘isn’t that 10% of the population?’” Pepper said. 

Compared to the Boston location, Hanover is personal to Pepper, who lives in town. But it’s also lucrative. 

“It’s a $2 million business in its best days,” he said. “It’s not small.”

With his tumultuous business experience, Pepper wasn't phased by trying to survive the pandemic. Boloco received early support when a customer reached out asking Pepper how she could order from afar. He wasn’t able to get her a burrito in California, but he came up with another idea: allowing people to donate to Boloco, which used the funds to deliver meals to front-line workers. Each $5 donation bought a meal, and the GoFundMe effort raised more than $60,000 in a matter of weeks. About 2,000 meals were delivered to workers in the Upper Valley alone. The initiative was great PR and a stop-gap to keep employees working, but not necessarily good business. 

“We were being a little short-sighted there, thinking we don’t need to make money, just have to get through this,” Pepper said. “Sending our meals for $5 doesn’t make us money, but it does keep the lights on. But it didn’t allow us to pay rent — only pay for food and staff.”

Pepper doesn’t regret the decision, however. He said that he regularly takes financial risks, particularly at the Hanover location, because he can see the impact that the business’s support makes in the community. 

“We’re not a responsible business,” he said. “We’re irresponsible when it comes to doing things that make us feel better about our business.”

For months, Boloco paid workers $2 an hour in hazard pay, until that became financially unfeasible, Pepper said. That’s one example of how Pepper has grappled with the balance between being a mission-driven and profit-driven company. 

“We pay people well, support the community and run high quality business. But does that leave anything left over? It kind of needs to.”

In August, Pepper thought — again — that he would need to close the Boloco’s Boston locations. He’s since been able to nurse them along, but there’s never been a moment when he feared for the Hanover location. 

“For Hanover, I never worried that the business would go away,” he said. “I was grateful that we had separated the company.”

In part, that’s because he was able to access state grants to help cover the roughly 30% loss he had in 2020. Pepper didn’t know about the state grants until he was out to dinner in town and a fellow business owner mentioned them. With hours left to apply, Pepper scrambled to get the application in. 

“That dinner put $155,000 into our bank account,” he said. 

Boloco has also utilized two rounds of the federal Payment Protection Program (PPP). 

“If it weren’t for this government support, it would be so much worse than it is,” Pepper said. 

Accessing the grants has reaffirmed something Pepper believed a few years ago: that it often makes sense to separate a business into different entities. Since the Massachusetts locations are one entity, they received one PPP loan collectively, whereas some competitors received more funding because they could apply for loans at each location, Pepper said. Having separate entities also would have allowed Pepper to break leases and close struggling locations in Boston without shutting them all down, without leaving the successful location on the hook for fees associated with the broken leases. 

“From a number of standpoints there’s some benefits about having each location under different entity,” Pepper said. “Maybe I was a little naive.” 

Pepper has had some pandemic flops — like investing in adult-sized tricycles that he thought could be used for delivery. But overall, he feels like the pandemic has opened an opportunity. Right now, despite the economic difficulties, he feels that people are more willing to support companies that align with their values, whether that’s around fair wages or environmental responsibility. 

“People listen to the narrative because of the pandemic,” he said. If a business raises prices to continue to keep people employed, customers are more likely to tolerate that, for example, he said. That presents an opportunity for businesses to make changes that they had considered previously. 

“People will care more today about doing the right thing than in the past,” Pepper said. 

This story is part of the 50 Businesses, 50 Solutions series, shared by partners in The Granite State News Collaborative, that aims to highlight how business leaders across the state, from mom and pop shops, to large corporations have adapted to meet the challenges and disruptions caused by the novel coronavirus in the hopes others may be able to replicate these ideas and innovations. Tell us your story here. For more information visit collaborativenh.org.