Business a Grind for Chorizo Queen

When Laura Balverde-Sanchez is out doing the family grocery shopping, there are times she just can’t resist the urge to rearrange the display at the meat counter.

“And then my husband says, ‘Laura!’ ” Balverde-Sanchez recounts with a laugh.

It isn’t some strange hobby, just good business. Balverde-Sanchez runs New El Rey Sausage Co., a reinvigorated version of a bankrupt Los Angeles company that she bought in 1983 with her husband, grocer Joe Sanchez, and two other partners.

New El Rey now employs 37 people at its downtown factory, and last year revenue hit $3.1 million. The company’s brand of chorizo, a spicy Mexican sausage, is sold in 10 states. New El Rey has begun slowly diversifying into other Mexican food products, and the company’s growth will probably quicken, Balverde-Sanchez figures, once renovation is completed on New El Rey’s new home in Vernon early next year.

What’s more, the company’s success is winning awards. Balverde-Sanchez was named 1987 Small Business Person of the Year by the Los Angeles office of the U.S. Small Business Administration as well as a Woman of Achievement at the Governor’s Conference on Women in Business in June.

But it wasn’t always that way.

The road to becoming uncrowned chorizo queen of Southern California was tough for Balverde-Sanchez. Although the 37-year-old former teacher and personnel director was not unschooled in the grueling ways of small business, nothing could prepare her for the challenge she found in the former El Rey Sausage Co., which had filed for bankruptcy protection after more than 30 years of operation. But a mixture of resourcefulness, austerity and a head-banging perseverance, Balverde-Sanchez says, finally turned the business around.

“I didn’t know what I was getting into,” she recalls. “It’s a tough industry” with very few women in top positions.

The El Rey brand had been off the store shelves for a year when Balverde-Sanchez and her husband, an independent grocer well-known in the Latino community, bought the sausage company. (They subsequently bought out their two partners.)

The company, a victim of overexpansion, had gone under without warning, and many of its old creditors were leery of the new owners. In the meantime, Carmelita Provision Co. of Monterey Park “filled the void very nicely,” Balverde-Sanchez says, becoming the predominant brand of chorizo in Southern California.

New El Rey could get no credit at first and was forced to operate on a pay-as-you-go basis. After three food brokers were unsuccessful at selling the chorizo, Balverde-Sanchez began knocking on doors herself and many times was turned away.

“When I was doing sales, I did a lot of crying at home. I was taking it personally,” she says. “There wasn’t anything wrong with me, it was the product. The packaging wasn’t right; the pricing wasn’t right--things like that.”

But a sense of humor got her through those times: Sales prospects “would say, ‘Laura, I’m sick of seeing you.’ I’d say, ‘Tomorrow, I’ll come back as a blonde.’ ”

The company continued to lose money in 1983 and was forced to lay off all but three of its nine employees. Balverde-Sanchez found herself on the line, working with her employees to make chorizo and putting in 70-hour weeks.

“In the first year I lost 25 pounds,” she says. “It was a very, very stressful time for the whole family.”

Balverde-Sanchez remembers one particularly awful day when she was forced to admit to her accountant that even though she had briefly owned an antique store, she had no idea how to read a balance sheet.

“I was really in tears,” she says. “I said, ‘Show me what numbers need to get bigger and what numbers need to get smaller.’ I found out he privately told my husband, ‘I think you’re going to go under with her,’ but he said, ‘No, let’s give Laura a chance.’

“A year later (the accountant) came back and said, ‘I don’t know how you did it. You’re still losing money but you’re turning it around.’ ”

Keeps Tight Control

It took 1 1/2 years until the big break--the El Rey brand was finally accepted by Certified Grocers of California, a retailer-owned wholesale distributor with about 2,300 member stores. The stable of accounts began to build, serviced by an in-house staff of food brokers who visit 15 to 20 stores a day. The company’s staff also does demonstrations and passes out samples in grocery stores.

Employees are encouraged with $25 awards to develop recipes for package inserts using chorizo, which is traditionally served with eggs. Balverde-Sanchez came up with one of the more unusual--a quiche made with longaniza, a chunky chorizo of pork shoulder in natural casings. The company also makes pork chorizo (ingredients include pork meat and glands), beef chorizo (made with beef meat and glands) and bolita chorizo (a combination of pork shoulder and beef and pork glands).

Balverde-Sanchez runs the business with a tight eye on expenses. Everything that can be safely reused is. Balverde-Sanchez’s father, a retired machinist, often tinkers with company trucks and machinery to keep them running. The company mixes its own spices to ensure quality.

And Balverde-Sanchez’s resourcefulness has worked well for the business. Two years ago, Balverde-Sanchez became interested in buying some refrigerated trucks that Crocker National Bank took back from Jalisco Mexican Products when that company went out of business, but there was a catch. She didn’t have enough money to buy them.

So Balverde-Sanchez persuaded the bank to let her make a down payment, use the trucks for two months and then pay the balance with the extra money the vehicles earned for the company during that period.

Rival Still Leads

New El Rey has made significant gains since 1983. The company will do about $6 million in sales by the end of the fiscal year in April, compared to $600,000 in 1983, she says.

Despite the competition, Carmelita Provision Co. still leads the market, says Frank Lopez, whose late father Mario founded the company 52 years ago.

“We work hard and keep plugging away,” said Lopez, co-owner of Carmelita with brothers Mario and Carlos. “There’s no relaxing in this business.”

Chorizo, the taste of which varies from brand to brand, is acquiring an ever-growing non-Latino following, Lopez says. “Chorizo is bought by all segments of society now.”

Balverde-Sanchez says: “We’re doing well, and that’s good. One company can’t service all the orders.”

Now New El Rey is preparing to move into a renovated 60,000-square-foot building in Vernon, quite a step up from the 10,000-square-foot factory the company owns downtown. Balverde-Sanchez hopes to expand the company’s sales territory, increase its private label business and slowly move into new products. In addition to chorizo, the company name is on salsa, chicharrones (fried pork rinds) and cotija (a dry Parmesan-like cheese), the production of which is contracted out.

“We would like to expand, but we have to be very careful,” she says.

Despite the company’s success, the work remains hard and nothing is assured. “I’m shoveling the coal into the furnace for this train we’re on and at the same time I’m laying the track,” she says.

“Some people say we’ve arrived. Well, that’s nice, we’ve arrived. But we have to make sure we’ll be asked to stay, so in my book we’re still climbing.”