SOUTHERN CALIFORNIA ENTERPRISE : Survival Story : Wartime Friends Build Firm Into Major Catering Truck Force

Call them catering trucks or meat wagons or lunch trucks or loncherias or even, as the health department does, “mobile food preparation units.”

Just don’t call them roach coaches , at least not around the headquarters of Cater-Craft Foods Inc., one of the largest catering truck companies in Southern California.

That common slang term makes the principals of Cater-Craft frown as one. “We don’t like that name very much,” said one tersely.

Small wonder, because Southern California is the catering truck capital of the world. And in this ultra-competitive industry, a sick customer or a flat tire suddenly becomes a matter of survival, with hundreds of other operators ready to move in and lean on those tune-blaring horns.

Cater-Craft has been adept at figuring out how to keep its trucks on the road and the customers coming back. Survival has also meant outlasting a recession that finally appears to be easing, and overcoming the stain on Cater-Craft’s reputation left by government charges of antitrust violations, predatory pricing and intimidation of competitors. Cater-Craft officials still maintain their innocence, but say they settled the suit to avoid litigation costs.

But for the four men who own Cater-Craft, survival means much more, as witnessed by a faded photograph that holds a place of honor over the company’s fancy new computerized cash register. In it stand four teen-agers, far from their Armenian homes, smiling for the camera in a refugee relocation camp for those who survived forced labor in Nazi Germany.

Albert Petrosian, Erik Pulatian, Nick Minasian and Leo Rawoew have done an awful lot of things together since they met in 1945 in Germany.

“They brought us from Russia for free labor,” said Erik Pulatian, an unassuming man who still puts in 12-hour days at Cater-Craft, wearing the same uniform as the resident mechanics. “They didn’t call it prison. They called it ‘labor camps,’ ” Pulatian said.

The four young men found sponsors in the United States willing to help them get started in a new country. They scattered to different states and different occupations but came together in Los Angeles nearly three decades ago to try to make a living selling food out of four little restaurants on wheels. They settled within blocks of each other in Montebello. One partner’s son married another partner’s daughter. Their 21-employee work force is thick with relatives.

Together, the four entrepreneurs, all in their mid-60s now, built a company that will serve up more than $6 million in sales this year, said General Manager Earl Williams, who runs Cater-Craft’s day-to-day operations and has worked with the men for 25 years. (Minasian is president, Pulatian is vice president and the other two partners are semi-retired.)

But it remains a constant struggle, with nearly 3,000 licensed trucks vying to feed a hungry city. Nobody counts the unlicensed trucks, but they are considered to be a growing problem. Cater-Craft owns 51 trucks, and another 70 use the firm’s headquarters at the southwest edge of Downtown Los Angeles as a base of operations.

“There are a lot of lunch trucks in the city of Los Angeles. If you miss a day, then you have two trucks waiting there the next day trying to get your stop,” said Williams, who figures there are about 25 industrial catering companies in Los Angeles.

“It’s very competitive. It’s not the same” as it was in 1966, when the business started, said Al Petrosian, surveying the company’s cavernous commissary, which resembles a Price Club without the frills. “But we try to run our business real clean.”

The episode with the district attorney’s office was all a big misunderstanding and was settled to avoid the cost of prolonged litigation, Williams said.

The lawsuit, filed in 1986 in Superior Court, charged Cater-Craft and another firm, A La Carte Catering, with anti-competitive practices that included agreeing to divide certain markets between them, selling food at artificially low prices to push out competitors and physically threatening--in one instance, beating up--competing truck drivers who tried to move into the territories that the two companies had staked out. The two industrial caterers had formed an illegal trust, which the firms’ officers had characterized as “a very good agreement among friends,” the lawsuit stated.

Without admitting guilt, Cater-Craft settled the lawsuit in 1989 by agreeing to an injunction blocking anti-competitive practices and by paying $20,000 in civil penalties and investigation costs. A La Carte Catering also settled without admitting wrongdoing, agreed to the injunction and paid $40,750 in penalties and investigation costs.

“I can truthfully say it was a false accusation,” Williams said. “The lawyer said, ‘You can either pay this or pay me $50,000 and I’ll fight it.’ ”

Williams called industrial catering “an extremely hard business to be in” because of all the insurance costs, overhead and government regulations involved.

A single truck, generally a customized General Motors vehicle, will cost $55,000 or $65,000 but can easily run as high as $100,000, Williams said. Fees and insurance on the truck total more than $10,500 a year plus 8.25% sales tax, he said.

Health inspectors visit frequently, making sure the trucks are clean and in compliance with a myriad of health regulations. Trucks also must abide by restrictions in different cities concerning such things as length of stay and use of horns.

As with many small businesses, financing has been a nagging problem for Cater-Craft, which is constantly servicing and replacing trucks and other equipment. But the company’s bank, Wells Fargo, recently developed a product called Custom Capital that allows small businesses to turn a line of credit into an equipment loan with a single phone call, thereby avoiding lengthy delays while loan documents are readied.

“In this business, when you need a truck, you need it now and you can’t wait three or four months to get it financed, so that really helped us,” Williams said, adding that the firm has purchased several trucks using this loan system.

At Cater-Craft, a typical day starts at 4 a.m. as the trucks begin to pour into the huge lot and park around the facility’s giant ice-making machine, which turns out 38,000 gallons of ice a day. A few are “cold trucks,” carrying only drinks and prepackaged foods, but most are “hot trucks,” which cook hot food right on board.

The facility turns into semi-organized chaos as more than 400 people bustle about, getting the trucks ready to head to more than 1,600 locations. Cater-Craft’s commissary will sell $30,000 to $35,000 worth of food and cash to truck drivers in a single morning.

During the day, supervisors with cellular telephones keep tabs on the trucks, making sure they hit their stops and dispatching mechanics as needed. In the afternoon, the trucks return and the arduous clean-up process begins.

“People don’t realize how much work goes into those catering trucks,” Williams said.

Cater-Craft rents its trucks to drivers, who are independent contractors. One truck can ring up sales of several hundred dollars a day, and it is the driver who determines how well a truck does, Williams said. A winning personality sells a lot more burritos and soda, he said.

“I know some that do $2,000 a day and I know some that do $100 a day,” Williams said. “Everybody sells the same food. The only thing that Cater-Craft has to sell is the good personality of the drivers.”

The business becomes a veritable catalogue of the city’s eating habits.

Each day, the trucks run through nearly 5,000 French rolls and more than 7,500 eggs. Each month, they peddle more than a million cans of soda and 72,000 bags of Frito-Lay brand chips. Bacon comes in by the truckloads from Montana. The company once sold cases of Armenian bread for sandwiches; now tortillas are the most popular.

Cigarette sales are down sharply. A decade ago, the company would sell 40 or 50 cases of cigarettes a month. Now they sell two cases a month.

Catering trucks also are a good gauge of the region’s economic health, Williams said.

“We’re the first to know when business gets bad because people are bringing the brown bag,” Williams said.

Cater-Craft’s revenues hit a high of $8 million annually before the recession, then companies began laying off and sales slipped below $6 million.

“Everybody got burned,” said co-owner Nick Minasian. “1993 was the worst year.”

Added Petrosian: “We cut even our pay to keep going.”

But, the partners agree, things are getting better. Sales are climbing and will top $6 million this year.

“I see a turnaround. It’s a damn slow one, but I see an increase,” Williams said.

And the trucks keep coming and going.

“We just do our job and chug on down the road,” Williams said.