Cordúa Restaurants Inc. Disputes Allegations of Founder and Namesake — Updated

Updated 9/20/18, 11:54 a.m.: We’ve received a statement from Michael Cordúa, which is at the end of this article. 

We reported last week that longtime restaurateur Michael Cordúa and his son, executive chef David Cordúa, were no longer with Cordúa Restaurants Inc., the company that currently owns multiple Churrascos locations and one Amerícas in River Oaks. The elder Cordúa started the business over 30 years ago when he opened the first Churrascos location in Houston. Now, the company that owns Cordúa Restaurants has come forward to dispute the Cordúas’ account of the issues surrounding their exits. 

Houston Food Finder received a document from Chris Begala of Begala-McGrath, who says he’s a consultant for Cordúa Restaurants, Inc. as well as its parent company, Deshon Investments. Within the document are comments said to be from Juan Deshon, CEO of Cordúa Restaurants, Inc. (Houston Food Finder contacted Deshon Investments multiple times during research for the original story but did not receive a response by the publication deadline. We still have had no direct contact with Deshon, only communications through Begala.) The document furthermore alleges that several of Michael and David Cordúa’s statements are inaccurate and that there are other relevant facts not previously brought to light in our article. (The statement is available to read in its entirety at the end of this article.) 

“We deeply regret that the situation has come to this, but simply could not stand idly by while the Cordúas sadly and maliciously attacked our business, our outstanding chefs and other employees, and misrepresented provable facts,” said Deshon via the statement. It goes on to dispute, among other things, David Cordúa’s account that he left in August 2018 by “mutual agreement,” instead claiming, “The board of directors fired David Cordúa for cause after discovering he was working on other projects separate from the company that presented a clear conflict of interest.” We asked what those projects were and Begala said Deshon Investments was declining to answer due to pending litigation, which is detailed later in this story. 

We contacted David Cordúa and asked him to respond to the allegation regarding his separation from the company. “I was employed until August 1,” he said. “They offered me a severance package provided that I stated that my separation was a mutual agreement. They also asked me to sign a non-compete agreement which prevented me from operating in the hospitality industry for two years within 200 miles of Houston, which I refused to sign. That isn’t in the spirit of Houston to try and put down your competitors. Restaurateurs and chefs don’t view each other as competitors; we support each other for the betterment of the city,” said Cordúa.

David Cordúa
Executive chef David Cordúa, formerly of Cordúa Restaurants. Photo by Phaedra Cook

What about the projects that were deemed a conflict of interest? “I wasn’t working on any projects while I was employed for the company,” claims David Cordúa. “I did have some inquiries in my email that they went through and found after I was let go, but I wasn’t working on anything. However, I did offer to continue to help with the catering side of the business after I was let go. The day after I made the offer, they filed suit against my parents, so I withdrew that offer,” he added.

David Cordúa, who is not a party to the current litigation, has a few complaints of his own regarding how Cordua Restaurants Inc. has treated his family, both in the past and currently. In 2013, he and his father created a cookbook entitled, Cordúa: Foods of the Americas from the Legendary Texas Restaurant Family. The publication coincided with the 25th anniversary of the first Churrascos. David Cordúa claims that as soon as Deshon Investments was a majority partner, “they banned its sale within the company because the Deshons weren’t mentioned in it as investors.” He believes this was the beginning of the conflicts between the Cordúas and Deshon Investments.

In addition, David Cordúa says that multiple Churrascos and Amerícas patrons have contacted him since his separation from the company to say they were misled by current staff members as to his current status. “Guests asked for me and [the staff said] I wasn’t there but just at another location.”

We went back to Begala to see if Deshon wanted to respond to these latest comments from David Cordúa, who replied, “Houston Food Finder has had my client’s statement and back-up material since Thursday morning. It is now Wednesday afternoon and the [original] article has not been updated. You have what we sent you and we are sticking to that foundational info.”

(Editor’s note: due to the new information we were supplied with by both Deshon Investments and the Cordúas, rather than an update to the original article, we deemed it necessary to publish a follow-up story. We do not publish stories until we believe we’ve completed our due diligence processes and our interview subjects have had sufficient time to respond.) 

The majority of Deshon Investments’ original statement tells the company’s side of the story regarding its financial involvement in Cordúa Restaurants as well as how it came to be that founder Michael Cordúa is no longer with the company.

“In 2011 we agreed to invest in a 50-50 ownership with Michael Cordúa in Cordúa Restaurants because the company was in dire need of an immediate cash infusion,” reads a quote from Deshon Investments in the statement. “Since then, Michael’s own actions and inability to meet his financial commitments have ultimately resulted in completely depleting his ownership share in Cordúa Restaurants, Inc.” Deshon Investments also claims that there was an initial investment of $2.5 million with a second cash infusion of $1.5 million “because of the financial situation in which Michael Cordúa had placed the company.”

Both the statement from Cordúa Restaurants and Michael Cordúa’s assertion in our original report agree that in 2016 he was removed from any management position in the company’s day-to-day operations, even while he maintained a seat on the board. Specifically, Cordúa Restaurants says they chose to not renew his contract in March 2016.

Churrascos The Woodlands
Churrascos in The Woodlands, one of the many owned by Cordúa Restaurants.
Photo by Chuck Cook Photography

Oddly, in the same month that the company chose not to renew Cordúa’s contract, it claims that it agreed to give Michael Cordúa a loan of $150,000. That’s where the litigation comes into play.  Early last month, Deshon Investments filed suit against both Cordúa and his wife for breach of contract, stating that they did not repay the loan. On August 24, the Cordúas filed a counterclaim alleging the company undervalued the shares that were to settle the balance of the loan and are seeking over $1 million in damages.  

Deshon Investments states that the valuation numbers were agreed upon by the board of directors, which at the time included Michael Cordúa. “Although the board could have made this determination on its own, they engaged an independent valuation firm to determine the fair market value of the shares — a decision that was unanimously agreed by the board, including board chairman Michael Cordúa.  This same value, which, again, Michael approved, was used to value Michael Cordúa’s shares that were foreclosed upon. At no point during the process did Mr. Cordúa make any objection to the use of the valuation firm, the firm selected, or the fair market value received for the shares,” reads the statement.

The company also claims that board members went to great lengths to ensure that the Cordúas’ shares weren’t diluted, though they did not say what actions were taken to maintain the value of the shares. Instead, it alleges that Michael Cordúa borrowed money from outside third parties to satisfy capital calls and maintain his ownership percentage in the company. “After Michael defaulted, this resulted in him losing or selling his shares in the company.  That is how Michael became diluted, and Deshon became the majority owner in the company,” the statement reads. “This past spring, we were notified that Michael was forced to transfer another 500 shares to someone who previously loaned him money for a capital call. These and other actions by Michael took his ownership position to zero.” 

Deshon Investments maintains that in spite of the litigation and departure of the Cordúas that the company is doing well. “Cordúa Restaurants, Inc. is in a strong position, and is moving forward maintaining its focus on culinary excellence, superior customer service and offering an incredible dining experience.  We salute the over 400 employees at the heart of the brand’s 30-year success, whose passion and hard work day-in and day-out are carrying us toward an exciting future. We remain committed to our customers and our community.” 

Houston Food Finder contacted Michael Cordúa to find out if he wanted to respond to any of Cordúa Restaurants Inc.’s assertions. While he said he would be issuing a counter-statement, we have not yet received it. Should that happen, either this article is going to be updated or we’ll issue an additional follow-up story. See below for his statement.

Otherwise, it sounds like the rest of this tale is going to play out in the court system. A copy of the statement from Deshon Investments is available at this link

Update: on Thursday, September 20, we received the following statement from Michael Cordúa via a representative.

“Throughout the last few years, the partners we trusted as family made it their goal to intentionally oppress us for being Corduas, gradually squeezing us out to diminish our influence. I was not the chairman of the board at the time of the independent valuation. I was on the board, but I had been removed from my position as chairman and replaced by Mr. Deshon’s wife and had no effective voice – my objections and concerns about the valuation were ignored. David was removed from the board entirely at that time as well. I also was fired from the company without any severance pay after 28 years (which would have eliminated the existence of the lawsuit). Now, they want to use those same oppressive events against us. But that’s not what David and I are focusing on. We are proud of what we created, and we wish Cordua Restaurants, Inc. the best of luck for the future. We’re simultaneously embracing all the entrepreneurial lessons we’ve learned about choosing partners wisely. I am excited to be back at the culinary innovation table and even more excited to continue to serve people with authenticity, passion and yummy-ness – it’s what’s imprinted in our hospitality DNA.”

Comments (1)

Share Your Thoughts on This Article

  • September 22, 2018 at 12:20 amDr. Ramesh Sadeghian

    My family and I have been a fan of Churrascos restaurants for the past 20 years. Unfortunately, a couple of years ago we noticed a decline in the quality of the food as well as their service. Now I know what the reason has been. It is a shame that what the Cordua’s family built for so many years has been hijacked and now ruined by some profiteers that apparently don’t know a thing about the restaurant business.