Trips Too Taxing, So Couple Turn to Tortillas : Husband and wife market popular Mexican staple with longer shelf life. Markets snap it up.
Starting a food-processing company is like having a baby, said Laurie S. O’Brien, who with her husband, Richard, operates a fledgling tortilleria in Newport Beach.
You plan it, nurture it, labor over it and take pride in the result, said the 36-year-old entrepreneur, who two months ago gave birth to the couple’s second daughter. The major difference, said the O’Briens, is that it took longer to plan their young company, Catalina Foods Corp.
When they decided to go into the tortilla business, Laurie, who used to manage a Los Angeles clothing store, didn’t know much about the food industry. Nor did her husband, a former mortgage banker. Richard’s job required him to travel so extensively that he was home only two weeks a month, so the O’Briens decided to start their own business.
Based on informal market research a few years ago, the O’Briens found that Latino food, like Japanese cuisine, is becoming increasingly popular among non-Latinos in Southern California. In particular, the couple found that food wrapped in tortillas--such as tacos and quesadillas --were a favorite.
According to a nationwide survey of tortillerias conducted by the Tortilla Industry Assn. in Sherman Oaks, tortilla sales growth averaged 20% annually in the last decade, excluding tortilla chips. Irwin Steinberg, executive director of the 2-year-old trade group, estimates that the U.S. market for tortillas reached $1.6 billion last year, with Southern California accounting for 18% of those sales. The overall sales of tortillas, including tortilla chips, adds up to about $3.5 billion annually, he said.
The survey of 325 major tortilla makers also found that the largest growth rates came from areas with low Latino populations, he said. Full results of the survey will be released at the group’s second annual convention in San Antonio later this month.
Opening a tortilleria , which is Spanish for tortilla factory, is a challenge, especially when you’re not familiar with Latino culture or the food processing industry, the O’Briens said. For starters, they borrowed and improved on flour tortilla recipes from relatives and friends until coming up with one they liked--a lard-based tortilla that appears thin and fragile but has an elastic quality to keep it from tearing easily.
It took months for the O’Briens to find a company that could come up with the right dough-making machines and other processing equipment to make the O’Briens’ crepe- like tortillas.
From talking to shoppers, they discovered that cooked tortillas sold in most supermarkets have an estimated shelf life of about a month. They then shopped for a manufacturer that could supply the zip-lock bags their company uses, which adds convenience and extends the shelf life of its uncooked tortillas to about 90 days. In the evenings, the couple studied packaging designs and devised a name for their product.
“We took out a map of Mexico,” Richard said, “checked for a city and decided on Sonora,” which they were later told was where the flour tortilla got started.
Early testing of their lard-based tortilla revealed that people liked the convenience of the zip-lock bag and the chewy taste of the Catalina Foods tortilla.
“We also found that not only the (non-Latinos) liked our tortilla, but that many second-generation Hispanic-American families liked it too,” Laurie said.
Confident that they had created a well-packaged, thin tortilla that would be marketable, they met with executives at Vons supermarket more than two years ago for a taste test.
“They liked it. And I thought that they’d want us to supply 20 or 30 of their supermarkets,” Laurie said. But she was mistaken. Vons wanted the O’Briens to supply all 328 of its stores in Southern California, becoming the first company to supply uncooked tortillas to a major chain.
“When we got Vons, we decided that we’d like to get the rest of the major retailers,” she said.
The O’Briens leased a warehouse in Santa Ana, which they turned into a processing facility, and went into full production in mid-March, 1990, in time for the Latino community’s Cinco de Mayo, or May 5, celebration.
Today, Sonora tortillas can be found in the refrigerated deli sections of several major supermarket chains, including Lucky, Ralphs, Hughes and some independent grocers in Southern California and Nevada. Last week, Catalina Foods received its first Midwest order from Chicago-based Jewel Food Stores, which operates 213 supermarkets mainly in and near the Windy City.
Catalina Foods, which employs 15 people, also has entered the lucrative food service industry, supplying uncooked tortillas to restaurant chains, like the Acapulco restaurant chain, in the Southland. It is also negotiating with a major Northern California supermarket chain to distribute its uncooked tortillas in the fall. The company’s goal is to distribute the Sonora brand nationwide.
“We found in our research that the bulk of the tortilla producers are fragmented and there’s only a handful of dominant players in the market. But we also found that the popularity of Mexican food is a coast-to-coast market,” Richard O’Brien said.
One of the dominant players is El Metate in Santa Ana, one of Orange County’s oldest tortilla makers, with 1990 sales of $4 million. It supplies corn and flour tortillas to the El Torito and Tortilla Flats restaurant chains and tortilla chips to Albertson’s and Ralphs supermarkets.
“As people see it, the tortilla is a bulk, low-end business, but we want to turn it around and make it a high-quality and lesser volume business,” Richard said.
Supermarkets retail a bag containing a dozen sheets of 9-inch, uncooked Catalina Foods tortillas for about $2.27. Because there are no other uncooked tortillas being marketed by major supermarkets, the O’Briens feel that they have limited competition.
To reach the high-end market, he and his wife are designing a cholesterol-free, vegetable-oil-based flour tortilla to introduce early next year.
It was a tough two years of careful product and market research for the O’Briens, but they said they are on their way to controlling a small piece of the growing Southland tortilla market, which is estimated at $275 million. Catalina Foods’ revenue for the first six months of 1991 has already exceeded the company’s first year sales of $200,000. The O’Briens, who have a patent pending for their process of making and preserving uncooked tortillas, estimate that sales this year could reach $500,000.
“I’ve gained 15 pounds in the last two years, had a baby and had to learn a lot about the food industry, and I don’t know how we got this business going,” said Laurie O’Brien, who, like her husband, splits time between Catalina Foods’ offices in Newport Beach, its manufacturing facility in Santa Ana, and their two daughters--Lauren, 6; and Reiley, 2 months.
“I guess, we’re one of those lucky couples,” Richard O’Brien said.