At the center of Swagyu's recent transformation is Juan José Arellano Hernández, a native Mexico businessman whose sprawling Grupo ARHE empire - and its murky financial past - casts a shadow over the brand's aggressive expansion plans in San Diego and beyond. As neighboring businesses shutter and questions of financial opacity linger, the story of Swagyu's latest chapter is a sizzling mix of ambition and unease juicier than its signature patties.
From A San Diego Chef's Vision to Mexican Corporate Takeover
Swagyu's story started modestly with its Imperial Beach flagship butchery and burger shop in 2020, founded by San Diego native chef Steve Brown under Cosecha SD LLC, the parent company known for its high-end pop-up dinners. Known for options like the OG Smash Burger and El Swagador, the chain eventually expanded locally to Poway, Pacific Beach, La Jolla, Little Italy and La Mesa, as well as outside San Diego with branches in Newport Beach and Garden Grove, earning a substantial fanbase along the way.
Brown also distanced himself from the expansion when pressed for more information for this article, telling this outlet, "Juan's company came in to invest and expand the Swagyu Burger Brand Nationwide. They are also opening other concepts next to the downtown location I think but I wasn't a part of that. The Swagyu Burger chain concept just isn’t for me and the new corporate format so I had to part ways and focus on my upscale dining and my new product line."
Enter new Swagyu boss, Juan José Arellano Hernández, the Sinaloa businessman behind Mazatlán's Grupo ARHE, reportedly spanning over 100 companies including hotels, gas stations, schools, car rental businesses, sports teams, spirits brands, and now Swagyu. The specifics of when or how Swagyu ownership completely transferred the company remain unclear, but Hernández began his involvement with the concept within the past year.
East Village Shake-Up: Buyouts and Closures
Swagyu's new location, steps from Petco Park, aims to capitalize on game-day crowds - a savvy move in a district where food tourism generates an estimated $1 billion annually, according to the San Diego Tourism Authority. Hernández got a firsthand taste of the downtown San Diego ballpark last season when the San Diego Padres invited him to throw out the first pitch at a Major League game against the Houston Astros, cementing his ties to the area's sports culture.
After Swagyu took over the former R Place Sports Bar & Grill last fall to capitalize on Padres playoff baseball, buying out the space for what we've been informed was a heavily inflated price, ownership began planning to expand their presence in the neighborhood. Rumors have been swirling that the new Swagyu team recently shelled out more than $1 million to buy out two neighboring establishments: El Puerto Seafood By the Park and Short Stop Mediterranean, far above either restaurants' appraised value, although these figures could not be independently verified. Short Stop is already gone, and El Puerto closed after a farewell party on April 5, ending nearly eight years of operation.
A Sinaloa Empire Under Scrutiny
A March 31, 2025, U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) alert (FIN-2025-Alert001) warned of Mexico-based transnational crime groups laundering cash through U.S. real estate and businesses. The alert, aimed at urging financial institutions to heighten vigilance, outlines how perpetrators move illicit cash across borders to obscure its origins. There is no evidence linking Swagyu or Grupo ARHE to the activities referenced in the alert, , but the timing invites speculation on broader patterns of international investment in U.S. commercial real estate.
What’s Next for East Village?
Swagyu's story started modestly with its Imperial Beach flagship butchery and burger shop in 2020, founded by San Diego native chef Steve Brown under Cosecha SD LLC, the parent company known for its high-end pop-up dinners. Known for options like the OG Smash Burger and El Swagador, the chain eventually expanded locally to Poway, Pacific Beach, La Jolla, Little Italy and La Mesa, as well as outside San Diego with branches in Newport Beach and Garden Grove, earning a substantial fanbase along the way.
During his tenure, Brown leveraged his personal brand to promote Swagyu, often posting high end cuts of meat and shirtless flexing photos on his Instagram page, @SwagyuBoss, where he has amassed over 150,000 followers. In the past year, he began advertising through company-branded luxury vehicles like a Lamborghini and G-Wagon wrapped in Swagyu’s logo—a flashy marketing tactic for what was seen as a relatively small local brand, drawing attention and speculation about the company’s financial strategy.
Yet Brown's ownership was marked by turbulence - closures (including the recent shuttering of the Little Italy branch), unfulfilled expansions, lawsuits, and a $4,000 burglary in Poway this past March (the second at that same location this year) - eventually culminating in his surprising exit just before the chain's East Village grand opening at 315 Tenth Avenue on March 22, 2025. In the Instagram video discussing his departure, Brown cited a philosophical clash with Swagyu's new corporate trajectory, saying, "the franchise model, fast food going nationwide doesn't really align with my vision, my goals, my creativity, and just who I am."
Yet Brown's ownership was marked by turbulence - closures (including the recent shuttering of the Little Italy branch), unfulfilled expansions, lawsuits, and a $4,000 burglary in Poway this past March (the second at that same location this year) - eventually culminating in his surprising exit just before the chain's East Village grand opening at 315 Tenth Avenue on March 22, 2025. In the Instagram video discussing his departure, Brown cited a philosophical clash with Swagyu's new corporate trajectory, saying, "the franchise model, fast food going nationwide doesn't really align with my vision, my goals, my creativity, and just who I am."
Enter new Swagyu boss, Juan José Arellano Hernández, the Sinaloa businessman behind Mazatlán's Grupo ARHE, reportedly spanning over 100 companies including hotels, gas stations, schools, car rental businesses, sports teams, spirits brands, and now Swagyu. The specifics of when or how Swagyu ownership completely transferred the company remain unclear, but Hernández began his involvement with the concept within the past year.
In a recent statement to this outlet, Hernández confirmed Grupo ARHE's investment in Swagyu Burger began in mid-2024. He noted that confidentiality and investment agreements prevent full disclosure of the details but emphasized that "all the owners of SWAGYU BURGER are delivering long hours of work and all the necessary efforts to develop a high-quality and profitable franchise business."
Corporate filings reveal a maze of entities encompassing the Swagyu brand. Swagyu Burger Bar Downtown LLC is listed as the operator under the East Village liquor license with Hernandez's son, Juan Jose Arellano Cristerna, as the sole Manager and Alexander Quinton Brown (no relation to Steve) cited as an officer, while Swagyu Burger Holdings LLC is now listed on the liquor license for Imperial Beach, and includes Hernández, Brown, Carlos Thomas Gonzalez, and Abish Kyle Simh.
The La Mesa outpost, which is listed by Google as "Temporarily closed" but has been scrubbed from the company's website, operates under Kaileiya Group Inc., according to the California ABC liquor license, led by Gonzalez. Swagyu's Instagram account manager stated the parent company for the burger chain is owned by 2 Brown Guys Corporation, registered to what appears to be a UPS Store mailbox at 3460 Marron Road in Oceanside with Hernández, Adnan Aun, Munir Aun, Abish Kyle Simh, and Jorge Luis Aguilar Acoste as officers. Hernández also has Grupo ARHE Real Estate Holdings LLC, initially filed with the California Secretary of State on August 16, 2022, and Grupo ARHE LLC, filed on June 30, 2023.
The La Mesa outpost, which is listed by Google as "Temporarily closed" but has been scrubbed from the company's website, operates under Kaileiya Group Inc., according to the California ABC liquor license, led by Gonzalez. Swagyu's Instagram account manager stated the parent company for the burger chain is owned by 2 Brown Guys Corporation, registered to what appears to be a UPS Store mailbox at 3460 Marron Road in Oceanside with Hernández, Adnan Aun, Munir Aun, Abish Kyle Simh, and Jorge Luis Aguilar Acoste as officers. Hernández also has Grupo ARHE Real Estate Holdings LLC, initially filed with the California Secretary of State on August 16, 2022, and Grupo ARHE LLC, filed on June 30, 2023.
Swagyu's new location, steps from Petco Park, aims to capitalize on game-day crowds - a savvy move in a district where food tourism generates an estimated $1 billion annually, according to the San Diego Tourism Authority. Hernández got a firsthand taste of the downtown San Diego ballpark last season when the San Diego Padres invited him to throw out the first pitch at a Major League game against the Houston Astros, cementing his ties to the area's sports culture.
After Swagyu took over the former R Place Sports Bar & Grill last fall to capitalize on Padres playoff baseball, buying out the space for what we've been informed was a heavily inflated price, ownership began planning to expand their presence in the neighborhood. Rumors have been swirling that the new Swagyu team recently shelled out more than $1 million to buy out two neighboring establishments: El Puerto Seafood By the Park and Short Stop Mediterranean, far above either restaurants' appraised value, although these figures could not be independently verified. Short Stop is already gone, and El Puerto closed after a farewell party on April 5, ending nearly eight years of operation.
Alex Rodriguez of El Puerto Seafood By the Park hinted at initial reluctance in making a deal: "We don’t discuss financials, but I will say this - we never had it in mind to sell. The price had to be right for us; we held out to be the last ones." He added cryptically, "There’s a bigger story than just Swagyu. Swagyu is just one of the brands under a bigger umbrella behind the deal."
A Sinaloa Empire Under Scrutiny
Hernández’s rise is striking and well documented. Starting with a small Mazatlán construction firm in 2003, he and brother Erick built Grupo ARHE into a behemoth, and now, according to Hernández, "Grupo ARHE currently has 12,500 collaborators in Mexico and 150 in California". Its portfolio dazzles: the $86 million Stelarhe Tower, the Leones de Yucatán baseball team, and, in 2023, Mexico's first Strategic Bonded Enclosure at the Mazatlán Logistics Center, a more than $40 million industrial park poised for warehousing and distribution.
Yet, shadows linger. Reports from Quinto Elemento (Part 1 and Part 2) and Ríodoce, two nonprofit Mexican investigative media outlets, among other media outlets, detail a 2021 probe by Mexico’s Financial Intelligence Unit (UIF) into Grupo ARHE, exploring possible links to a money laundering network tied to Genaro García Luna, Mexico's ex-Security Secretary convicted in 2023 in New York for Sinaloa Cartel ties and sentenced to over 38 years in prison late last year.
Quinto Elemento's reporting also detailed an earlier 2015-2016 UIF probe into ARHE related entities. During that time, the UIF investigation reportedly flagged hundreds of millions in pesos in suspicious transactions, with a large percentage in cash. The report claims that a 527-page file from the UIF established that authorities had been investigating dozens of individuals and legal entities linked in one way or another to the ARHE Group for "conducting massive operations with resources of alleged illicit origin."
This resulted in the temporary freezing of "the bank accounts of the Arellano Hernández brothers and 81 of their companies for several years," according to Quinto Elemento reports. The accounts were eventually unfrozen under Mexico President Enrique Peña Nieto's administration, only for the UIF to renew its focus on Grupo ARHE years later. Hernández's alleged ties to Inmobiliaria Damari - a firm that was believed to have bought luxury properties in Cancún and Texas via a suspected Delaware shell company - further fueled suspicions, though no charges have ever materialized in Mexico or the U.S.
More recently, in April 2023, Hernández's mother reportedly faced an arrest warrant with more than 60 others in the García Luna case but allegedly avoided jail by cooperating with prosecutors, later appearing at the CRIT Teletón Mazatlán inauguration in December 2024, alongside 65th President of Mexico Andrés Manuel López Obrador. Grupo ARHE’s reported 10 million-plus pesos donation to the event underscored its clout under Mexico's Fourth Transformation (4T) government, which was purportedly responsible for unblocking its accounts in 2018 after earlier freezes.
These allegations remain unproven, and Grupo ARHE has denied any wrongdoing. Hernández has strongly challenged the reporting through "legal action against those media," suing Quinto Elemento and Ríodoce for moral damages over their articles. The outlets stand by their work, backed by legal defenses and the UIF file.
In a statement to this outlet, Hernández criticized the Mexican media outlets' reporting as containing "defamation, inaccuracies, irresponsibilities and false publications" repeated over the years. He explained that in 2016, Grupo ARHE retained independent auditors Deloitte to conduct a forensic audit of the company’s operations in collaboration with the UIF, which concluded the origin and application of Grupo ARHE's resources was "totally legal." Hernández emphasized that there is "no relationship, personal or commercial interaction" between Grupo ARHE and any of the individuals or companies cited in the UIF’s original investigation, including Inmobiliaria Damari or Genaro García Luna.
After being sued, Quinto Elemento published Arellano's response to Part 1 of its report, as well as the reply to Part 2 of the story. In 2017, Ríodoce reported he hired Spanish online reputation management company Eliminalia to scrub negative press, a sign of his sensitivity to scrutiny.
Burgers or a Bigger Game?
The East Village buyouts could certainly be a legitimate play to corner a lucrative market. San Diego's $3.2 billion commercial real estate sector (according to CBRE in 2024) is a hotbed for investment, and consolidating a block near Petco Park could maximize Swagyu's draw. Given the scope of Hernández’s business interests and past investigations, his involvement has prompted questions and public curiosity.
The East Village buyouts could certainly be a legitimate play to corner a lucrative market. San Diego's $3.2 billion commercial real estate sector (according to CBRE in 2024) is a hotbed for investment, and consolidating a block near Petco Park could maximize Swagyu's draw. Given the scope of Hernández’s business interests and past investigations, his involvement has prompted questions and public curiosity.
What’s Next for East Village?
In a statement to this outlet, Hernández outlined Grupo ARHE’s mission, noting, "As founder of GRUPO ARHE, our business objective is to generate value in the provision of professional services, in economic sectors such as Tourism, Services, Infrastructure, and Industry. For more than 22 years, we have forged strategic alliances and franchises in Mexico and the United States such as ALAMO RENT A CAR, WORLD TRADE CENTER [in Mazatlan], and recently SWAGYU BURGER."
On Swagyu specifically, he added, "We have invested endless hours and resources in this project since it aligns with our vision of Food and Beverages for being an innovative proposal of premium burgers with Wagyu meat of the highest quality. For that reason, we are making investments to develop a profitable business model through the creation of a franchise system with a sustained expansion according to the Business Plan of our Ernest & Young Parthenon advisor."
Reflecting on his plans for the East Village area, Hernández shared, "About the commercial spaces at 315, 10th Ave (Seafood by the Park and Short Stop Mediterranean), at this time I can tell you that we are projecting the expansion of our gastronomic proposals in that privileged area of San Diego and around Petco Park for what Baseball represents for us personally and as a business group."
Hernández further revealed ambitious plans for Swagyu, stating, "We are currently making investments and looking for financing to open 40 more locations in Southern California."
Swagyu's ambitions extend far beyond its current burger empire, with plans to diversify its San Diego footprint and beyond. According to a promotional San Diego Magazine interview with "operations lead" Abish Kyle Simh, the chain is also set to launch a full-scale brewery at 2428 Fenton Street in Eastlake, spearheaded by Hernández, who has beer experience running Cervecería Bichola in Mazatlán - which is also home to the only Swagyu outpost outside California. Slated for a 2026 debut, this brewpub will reportedly pair craft beers with Neapolitan-style pizzas and bar bites, as well as signature burgers.
Reflecting on his plans for the East Village area, Hernández shared, "About the commercial spaces at 315, 10th Ave (Seafood by the Park and Short Stop Mediterranean), at this time I can tell you that we are projecting the expansion of our gastronomic proposals in that privileged area of San Diego and around Petco Park for what Baseball represents for us personally and as a business group."
Hernández further revealed ambitious plans for Swagyu, stating, "We are currently making investments and looking for financing to open 40 more locations in Southern California."
Swagyu's ambitions extend far beyond its current burger empire, with plans to diversify its San Diego footprint and beyond. According to a promotional San Diego Magazine interview with "operations lead" Abish Kyle Simh, the chain is also set to launch a full-scale brewery at 2428 Fenton Street in Eastlake, spearheaded by Hernández, who has beer experience running Cervecería Bichola in Mazatlán - which is also home to the only Swagyu outpost outside California. Slated for a 2026 debut, this brewpub will reportedly pair craft beers with Neapolitan-style pizzas and bar bites, as well as signature burgers.
Meanwhile, downtown San Diego will see two new ventures from Hernández in the next six months: a Mexican seafood restaurant taking over the former El Puerto Seafood By the Park and Bobby’s Pizza replacing Short Stop Mediterranean Cuisine. Not stopping there, Swagyu aims to flex its culinary muscle in larger venues like an upcoming Fullerton location, serving burgers by day and a high-end steakhouse menu by night with full liquor licenses, while smaller spots like Imperial Beach and UTC-Westfield La Jolla stick to the burger-only format.
As Swagyu rolls out its bold expansion under Hernández’s helm, questions linger about the true forces driving the brand and the motivations behind its moves. For now, Swagyu serves up Wagyu with a side of skepticism - leaving East Village, and beyond, to digest whether the real story is on the plate or behind the counter.
Editor’s Note: This article is based on publicly available information and previous reports from media outlets. All individuals and companies mentioned are presumed innocent of any wrongdoing. Allegations are presented as reported and are not independently verified by this publication. Statements from affected parties have been included to ensure a balanced and fair account.
Originally published on April 17, 2025.
