Hays Co Bar-B-Que has secured a $500,000 incentives package from the city of Kyle as the acclaimed restaurant relocates its operations from San Marcos.
It received unanimous approval from the Kyle City Council on Sept. 3 for the incentives aimed at helping it move into a former tire shop at 505 S. Old Highway 81. City officials are hoping the project serves as a catalyst for Kyle's downtown growth.
The 17-year-old barbecue business, owned by Michael and Asenette Hernandez, sold its 8,000-square-foot restaurant in San Marcos to the Hays County Food Bank in June. But the Hernandez family purchased the 1.5-acre property at 505 South Old Highway 81 on the edge of downtown Kyle.
Michael Hernandez said previously that the project — estimated to be finished in about a year and cost $2.5 to $3 million — will be built in two phases. The first will include a 2,000-square-foot restaurant, plus a roughly 1,500-square-foot outdoor area with a playscape, an outdoor music stage and a walk-up bar. The second phase will include a two-story area, comprised of six shipping containers on the bottom floor and another six on the upper, to be used by other restaurants and retail operators.
“My family and I are excited about making the move to Kyle," Hernandez said in a Sept. 5 statement. "We see the benefit all the way around, not just for us but for the community, the city of Kyle and the surrounding areas. We look forward to being another part of the strong foundation being planned out. We don’t just want to serve the community, we want to be the community.”
Kyle officials worked over the last several months to lure the restaurant, which has been featured in Texas Monthly Magazine’s list of top 50 BBQ joints since 2013. During a July meeting, Kyle officials praised the business and voted to draft a Chapter 380 incentive agreement for it.
“You’re not coming from a trailer directly here — (the) barbecue business is extremely competitive," Kyle Mayor Travis Mitchell said at the meeting. "It's extremely difficult, and a lot of times when cities want to financially incentivize a brand new small business, or a small business that maybe was succeeding out of a trailer but doesn’t know how to operate a larger facility, there’s a lot more risk to the city. But (Hays Co Bar-B-Que) is an established brand that has already made the move up."
The Hays Co Bar-B-Que economic development agreement — codenamed "Project Ember" in discussions — is with M&A Kingdom Enterprises LLC and provides a 50% sales and property tax rebate over three years, worth a maximum of $100,000. It also provides a one-time $400,000 grant to help fund property improvements, including paved parking and utilities. The property still must be rezoned.
Kyle officials are banking on the new business being a focal point downtown. The city's population of about 5,000 in 2000 grew to about 28,000 in 2010 and now has eclipsed 63,000, according to the U.S. Census Bureau. That makes it the second-fastest-growing city of its size in the country.
Hays Co Bar-B-Que brings in about $3 million a year in gross sales, Hernandez previously said. But barbecue is a difficult industry, he said, with the most recent challenges including inflation and hiring workers. This year, Hernandez said he has seen the price of goods climb between 15% and 20%, a hard trend to stomach when restaurants run on razor thin margins. Still, the business is profitable, he said. Hays Co Bar-B-Que is expected to employ between 15 to 20 workers, Hernandez said.
The reason for the move from San Marcos to Kyle is to scale back a bit with a smaller-footprint restaurant and provide more time to spend with his family, he said. Owning the property also provides a financial cushion by enabling some space to be leased out, he said.
When completed, the project will provide patrons a variety of dining options. Hernandez described it as similar to a food hall, where people from the same party can purchase food from whichever restaurant they prefer and gather in a communal area. Hernandez said he wants to bring more local restaurants and operators to the location. While the property is rezoned he said he also plans to open a food trailer.