In a time of economic turmoil, this tortilla company fully expects its
business to double within the next 18 months, by reaching new
customers beyond its traditional niche.
St. Marys, Pa., located deep in the Allegheny mountains, isn't the first place anyone would expect to find a tortilla manufacturing facility. Yet, after 21 years in business, MexAmerica Foods is nearly exceeding its current production capacity. The company was founded by Gerry and Sue Riddle in 1987. The couple had lived out West, and after returning to their roots in the East, were disappointed with the availability of authentic Mexican tortillas.
The Riddles started their tortilla business in a portion of a building owned by a lumber company. As their business grew, they eventually acquired the entire building and its plant manager Tom Kornacki, who assembled the tortilla equipment,assisted with the original formulas and has been with the company ever since. During the years, the Riddles developed a solid business that sold a high quality, award-winning product distributed within a 300-mile radius of its operating facility.
In July, MexAmerica Foods was acquired by Wingspan Capital Partners, Birmingham, Mich., a private equity firm that invests in promising specialized manufacturing companies throughout the United States. Joe Riley, a food manufacturing specialist with Wingspan and president and C.E.O. of MexAmerica Foods since its acquisition, realized the vast potential of the tortilla company that was, perhaps, stifling its own growth by limiting its geographic boundaries.
During the past several months, the company has begun to loosen its reins, having expanded its territory and considered business opportunities with customers the previous owners may have rebuffed. Riley and his fellow managers must now consider how to efficiently manage rapid growth as they work toward the goal of growing MexAmerica into a national brand.
When the Riddles realized the availability of authentic, great tasting tortillas was lacking in the eastern portion of the country, they seized the opportunity that lay before them. Developing the right formula required research and a trip back west to visit some tortilla producers, who provided guidance on the process.
“Mr. Riddle took samples of his tortillas to a number of supermarket chains and restaurants to see if there was any interest,” Riley explains. “He would go into the store and buy the product the store stocked. Then he would meet with the buyer with a sample of what the store was selling and a sample of what they could make and say, ‘If I could mass produce these, would you buy them?’ Upon tasting these unique tortillas, potential customers immediately said yes.”
When Wegman's Food Markets, a prestigious supermarket chain in Rochester, N.Y., agreed to buy the tortillas and put them in all of its stores, the Riddles knew their start-up venture would be worth pursuing. They leased a portion of the lumber company's 36,000 sq. ft. of space, purchased some used equipment and began revising the formula they had developed while out West to account for water, temperature and humidity differences associated with Pennsylvania's climate, Riley notes.
As MexAmerica Foods started supplying Wegman's and a few other supermarket chains, its business grew. Eventually, the company expanded from its original three or four employees to the nearly 42 it has today, and it occupies all 36,000 sq. ft. of the original building.
Although MexAmerica's production facility is older and features familiar tortilla equipment, the bakery produces distinctive tortillas. “The difference is in the formula and the quality control used,” Riley says. The Riddles focused on creating a tortilla that would behave like a fresh tortilla, but could be mass-produced, shipped and stored.
What the Riddles actually created was an award-winning product. In 2004, MexAmerica Foods' white flour tortillas, whole wheat flour tortillas and corn tortillas were judged to be the best tasting tortillas in each of their respective categories by the American Culinary Institute. Additionally, in 2007 and 2008, Men's Health magazine named MexAmerica tortillas as one of its 100 Best Foods for Men.
The company prides itself on using the minimum amount of preservatives to avoid having a chemical aftertaste or aroma when the package is opened. Its tortillas also are among the most healthful of all the national brands, Riley notes.
“Our tortillas have a sealed surface,” says Mike Renaud, sales and marketing manager. “The fact that this product is pressed means its surface is sealed. You can put juicy meats or vegetables in it, wrap it and they're not going to soak through. It's a very versatile, consumer-friendly product.”
In recent years, MexAmerica Foods has seen its flour tortilla line of products grow as the company branched out into some of the trendy and more healthful areas, such as whole grains, Renaud notes. Growth also will come from the natural and organic sectors.
While at the Natural Products Expo in Boston, Riley noticed his competitors offering lines of all-natural tortillas. However, when he questioned the products' availability, the natural tortillas were not being produced yet because of shelf life issues. “From what I'm hearing, shelf life is anywhere from four to 12 days,” Riley says. “In my opinion, if we can't get something that's at least 25 or 30 days, it's probably not worth doing.” Still, the company continues to work on its all-natural line as it searches for a natural solution to inhibiting mold and maintaining freshness, the biggest obstacles to marketing a natural tortilla.
Other product development projects in process include a line extension of 10-in. wraps for retail in a number of traditional and trendy flavors, as well as nutrient-enriched products.
Flour tortillas, corn tortillas and corn tortilla chips are each produced on separate production lines. A 1,000-lb. horizontal mixer draws flour from one of two 50,000-lb. silos. Typical dough batches range from 300 lb. to 500 lb., depending on the size desired. The flour tortilla line currently operates one 10-hour shift per day, but a second shift will be added in January to keep up with demand.
Dough is lifted in a hopper and fed into a dough divider ball machine/rounder. A scaling head fills pistons with dough and double drops six dough balls for a 12-drop run of 10-oz. tortillas. The divider can drop anywhere from four to 16 dough balls, depending on the size of the piece desired, Kornacki notes. MexAmerica produces tortillas ranging from 5 in. to 12 in., with dough ball weights ranging from 20 g to 100 g.
A rounding drum rolls dough into a ball shape. Dough balls then pass through a timing box, are dropped into a basket and sent to the proofer. Dough is proofed 6 to 15 minutes at 75°F, 75 percent relative humidity, depending on the product, before it is dropped to the pre-pressing platen and on to the press.
The pressed dough relaxes before being discharged to the oven in two stages, so that dough pieces enter the oven side-by-side, thereby maximizing space, Kornacki notes. Tortillas pass through the three-tiered oven in about 30 seconds and are discharged out the bottom. Product then travels through a 25-ft. long, seven-tiered cooling conveyor, where they are discharged, manually inspected, pass into a counter stacker, sealed, packaged and placed in a 2,500-sq.-ft. cooler. The majority of product is shipped to an outside storage facility or directly to a customer within 48 hours of being produced.
While flour dough used for flour tortilla production has a rising and proofing component, corn tortillas are made from masa through a roller and sheeting process. Masa is dumped into the masa feeder, which feeds into the roller head. As the masa is rolled into a flat sheet, the cutter presses up against the roller and forms the dough pieces. Scraps generated from the roller/sheeting process are automatically reworked back into the masa.
Secrecy was a normal way of doing business under the previous ownership, but Riley has been far more open to new ventures. “The former owners would not let anybody in the plant. In fact, when we began the acquisition process, the broker we dealt with wouldn't tell us what the product was,” Riley says. “We finally got to the point where we said if we're going to continue our due diligence discussions, we have to know the name of the company and what products they are producing.”
In addition, the previous owners would only sell tortillas within a 300-mile radius, which fell just short of New York City. Immediately after the acquisition, Riley removed that presumptive border. “If tortilla companies from California, Florida and Texas can ship their product to the East Coast, we can ship our tortillas back the other way. We will entertain any business opportunity that comes our way,” Riley adds.
Riley and his associates at Wingspan Capital Partners realize they purchased a strong company that makes a very good product. “Our goal is to, in time, make MexAmerica a national brand, and further grow our co-packing business,” Riley says. While part of Riley's plan involves expansion of the existing facility, ultimately, he and his associates recognize they must acquire other tortilla companies in strategic locations to accomplish their goal.
“We're actively looking,” Riley adds. “We're considering a couple of tortilla companies we've had conversations with that are actually larger than our company. They are in other regions of the country, and would offer MexAmerica additional production capacity and geographic marketing areas.”
At $4.5 million in sales, MexAmerica is a small company, but the new owners fully expect to double that within the next 18 months. Starting in January, production will add a second shift to keep up with growing demand. Production currently uses one semi-load of flour per week, an amount estimated to double by next year.
“We estimate that by February or March, we will have sold 100 percent of the production capacity of the plant, the way it sits today,” Riley says. “We are looking at expanding both flour tortilla and corn chip production, which will require new equipment and modifications to the building. We will probably add an office building onto the outside, tearing out the old offices to make room for new production lines. Additional flour silos are being considered, and one portion of the building will receive a higher room and ventilating system. We're certainly considering a major investment to this facility in the next year or two.”
“The tortilla industry itself has grown about 8 percent per year. That growth is projected to continue, especially in the Northeast and Southeast, which are two great areas for growth,” Renaud says. “A lot more Hispanics are relocating to the Southeast. In the Northeast, growth is due to the fact that people are being educated about this type of product and its health benefits. Now, you see supermarket chains, fast food restaurants and delicatessens making wraps. Business people can walk in at lunch and get a wrap already made up.”
MexAmerica Foods continues its growth and expansion by marketing an authentic, high quality tortilla that has become a trendy and versatile sandwich carrier. “I can honestly say we have not been negatively affected by the economy,” Riley says. “In fact, in some cases, as we're looking to grow, we're hiring more people as other industries lay them off.”
While future growth will primarily come from non-Hispanic populations, the population explosion of Hispanics also must be considered, as one of every five people in the United States will reportedly be of Latino origin by 2020. MexAmerica Foods appreciates feedback from Hispanics who have relocated from the West, and are thankful they have found an authentic tasting tortilla, Renaud notes.
As MexAmerica works toward its goal of becoming a national brand, it will rely on all segments of the population to help spur its growth forward.
Headquarters: St. Marys, Pa.
Ownership: Wingspan Capital Partners LLC
Web site: www.mexamericafoods.com
Plant size: 36,000 sq. ft.
Management: Joe Riley, president and C.E.O.; Mike Renaud, sales and marketing manager; Tom Kornacki, plant manager; Angel Preston, quality control and R&D manager; Darlene Samick, production manager; Elaine Vogt, purchasing manager; and Shari Frech, office and transportation manager
Product lines: Enriched-flour and whole wheat flour tortillas; flavored tortillas; yellow, white and organic blue corn tortillas; and corn tortilla chips
Marketing territory: Currently about 17 Northeastern states, from Ohio to West Virginia, further southeast into the Carolinas and up the East Coast, with a plan to expand nationally as opportunties for growth are identified
Customer base: Retail supermarket chains and foodservice providers, including restaurants, school systems, hospitals and commissaries, among others
Production lines: One flour tortilla line, one corn tortilla line and one corn tortilla chip line
Lb. flour/week: About 48,000 lb.
Sales: About $5 million
Number of Employees: About 42