501 South Alta Avenue
Company Perspectives:
We are committed to delivering quality products and outstanding customer service. Our mission is to be the best frozen Mexican food company in North America.
Privately owned, Ruiz Food Products, Inc. is the market leader in the frozen Mexican food category. Located south of Fresno, California, in the small town of Dinuba, the company produces approximately 200 different items--including burritos, tamales, taquitos, enchiladas, and chimichangas--most of which are packaged under its signature El Monterey label as well as the Ruiz and Prima Rosa brands. Ruiz Food is also the only frozen Mexican food manufacturer to sell in all channels of distribution: retail, convenience store, clubs, vending, industrial, and foodservice. In addition to nationwide distribution in the United States, Ruiz also sells its products in some 20 countries, including Canada, Japan, Panama, and Costa Rica.
Louis Ruiz Launches a Career During the Depression
Ruiz Food Products was founded by Louis Ruiz and his son, Fred, in 1964. Louis was born in Mexico and moved to Los Angeles as a child. By the age of ten he was already exhibiting an entrepreneurial spirit, working out a deal with a downtown W.T. Grant five-and-dime store: in return for cleaning, he received overstocked or damaged merchandise to peddle. As a young man, he owned a small grocery store, but when America entered World War II he sold the business and joined the Army. After the war, he took a job with the Flintkoke Corporation but soon supplemented his income by selling sweaters door to door. This side venture led to his once again striking out on his own and opening a small clothing store, which his wife ran while he continued his door-to-door efforts. By the 1950s, he recognized that Mexican food was gaining broad appeal in California and sold his clothing store to enter the tortilla business along with his four brothers. He spent considerable time, as well as all of his capital, in establishing the operation, but when he approached his brothers in 1954 about drawing up a formal operating agreement, they refused. As a result of this family fallout, Ruiz abandoned the business he was so instrumental in creating and went to work in small grocery stores in order to support his family. It was not until 1960 that he was able to launch another business. This time he bought a small truck, rented warehouse space, and began to deliver groceries to farms in the San Joaquin Valley. A high school student at the time, his son Fred also helped out.
Louis Ruiz had not given up on entering the Mexican food business, however, and soon targeted the production of frozen enchiladas. When his son pointed out that they could not hope to compete with the major companies already supplying the market, Louis conceived of a way to differentiate their product: they would use clear plastic packaging so that customers could see the merchandise. In 1964, the Ruizes established the company that would one day become Ruiz Food Products. Working out of a garage in Tulare, California, with little more than a freezer, Mixmaster, kitchen utensils from home, and a small commercial stove, they began to produce cheese and onion enchiladas, borrowing a recipe from Louis Ruiz's wife, Rosie. They also drew on her name for a label: "Rosita." At first, the Ruizes were unable to include meat, a common ingredient in enchiladas, because their rudimentary plant could not meet state or federal standards for meat processing. To placate grocers who complained that their meatless enchiladas appeared to skimp on fillings, they added beans, which resulted in a significant increase in sales. Unfortunately, the clear packaging did not work as anticipated, the film frosting on the inside and obscuring the customer's view of the enchiladas. It would take Louis two years of experimenting with different flours in order to create a tortilla dough that did not cause frost. In the meantime, Fred held two outside jobs and still found the time to take two years of college business courses, gaining knowledge that would prove instrumental in the growth of the family business.
Incorporation in 1967
During the early years, Ruiz Food was very much a shoestring affair. Louis took the truck he had used to deliver groceries and refrigerated it by adding an insulated plywood chest. After spending the morning with his son preparing the products, Louis made sales calls and deliveries in the afternoons. In order to accommodate these dual roles, he relied on gas station rest rooms, where he changed from business attire to clothes more suitable for making deliveries. When sales picked up, the Ruizes were able to supplement their limited storage capacity by turning to a commercial freezing plant. Then, in 1967, they found a 1,400-square-foot plant with a large freezer that had been used for poultry processing and was now available to lease. In order to raise the necessary funds to convert the facility and buy additional equipment, they incorporated the business as Ruiz Food Products, and sold 14,000 shares of stock at $1 each to Tulare residents. They retained 14,000 shares for themselves and eventually bought back about half of the public shares, much of which would be used in an employee stock ownership plan.
A business with five employees, Ruiz Food now had a plant that met California inspection standards, but it also had greater costs and cash flow problems. At one point, the company was unsure it could meet its payroll and the situation with creditors became so dire that the Ruizes determined that they might have to close the business in a matter of two weeks. To meet the challenge, they worked seven days a week, but more importantly Louis created a new way to sell a familiar product, tamales. Recalling how vendors in the Southwest used to sell tamales from pushcarts, steamed hot and wrapped in corn husks, he convinced five convenience store owners to allow him to install heating units in order to sell his tamales piping hot. The idea proved to be a instant success with customers and within days the merchants were ordering more tamales. This influx of cash saved the company and allowed it to begin expanding its offerings, including meat enchiladas. Annual revenues that totaled just $40,000 in 1967 reached $500,000 by 1975.
However, Ruiz Food faced yet another critical juncture in its history. When California elected to turn over responsibility for meat processing standards to the U.S. Agriculture Department, the company found that despite having met state standards its facilities fell far short of federal requirements. If the Ruizes wanted to stay in business they had no choice but to build a new plant. With no ready cash on hand and no established credit line, they had the difficult task of raising the $635,000 needed to build and equip a new facility. Louis Ruiz turned to the Small Business Administration (SBA) and was able to convince them that Ruiz Food was sound enough to support a $500,000 direct loan. He was then able to raise the rest of the money by obtaining an SBA-guaranteed loan from an area bank.
In 1977, Ruiz Food, now employing 26 people, opened its new plant in Tulare. Again the company's finances were delicately balanced, the Ruizes calculating that they had just seven months to reach a sales level that would sustain the business. It met that target and for the year recorded sales of $700,000. Moreover, Ruiz Food was in a position to take advantage of its ability to meet federal standards. Allowed to conduct interstate business, and with increased production capacity, it was now able to market its products in major markets. As a result, the company expanded its production capabilities and began hiring a large number of workers. By 1982, it formed a human resources department as part of its drive to become a major business. In 1983, with 205 employees and annual sales exceeding $15 million, Louis and Fred Ruiz received the United States Small Business Persons of the Year Award, which was presented to them by President Ronald Reagan in a Rose Garden ceremony at the White House.
By the late 1980s, Ruiz Food topped $25 million in annual revenues and employed more than 500 people. In October 1988, the company sent letters to Tulare leaders indicating they hoped to relocate the business to a new site where a larger production facility could be constructed to accommodate future growth. According to Fred Ruiz, recounting the episode years later, the city officials were "arrogant, prejudiced, and condescending." As a result Ruiz Foods built its new $16.5 million, 203,000-square-foot plant and corporate offices on a 43-acre site in Dinuba, a town of 12,000 people located in northern Tulare County. With greater production capacity, Ruiz Food was able to boost annual revenues to $85 million and employment to some 1,200 in 1992. In that same year, Louis and Fred Ruiz received the National Entrepreneurial Success Award from SBA, and the company was inducted into SBA's hall of fame in Washington, D.C. The following year, Fred Ruiz was named Executive of the Year by Refrigerated & Frozen Food Magazine.
Faced with a sluggish economy and increased competition, Ruiz Food was not without challenges in the early 1990s. In order to maintain growth, it retooled its management structure and Fred Ruiz, now heading the business, turned over more control to his management team to permit the company to become less dependent on a single individual. Ruiz Foods also suffered some adverse publicity when the Border Patrol, acting on a tip in an anonymous letter, visited the plant and determined that more than 200 workers were using false work papers. The company charged that the letter was written by former employees at the behest of the local chapter of the United Food and Commercial Workers Union. Regardless of how the matter was initiated, in the end the company was forced to terminate 123 employees, most of whom appeared to be illegal immigrants.
A New President and Ambitious Goals for the Future
In October 1996, Fred Ruiz announced that he was going to once again be more actively involved in the running of the company, whose annual revenues had stalled at the $90 million level and was stung by the departure of a major account. The company's president, David Hejl, resigned "to pursue other opportunities," and Ruiz temporarily assumed his post. After a year-long executive search, a new president, Ricardo Alvarez, was hired to help Ruiz Food reach the next level. Alvarez had some 20 years experience in the food service industry and came to the job with unique qualifications. Born in Chile, he attended high school in Puerto Rico, then earned a bachelor's degree in microbiology at the University of Florida and went on to earn a master's degree and a Ph.D. in food science. During the first eight years of his career, his work involved quality assurance, and he rose to the level of vice-president on the technical side of the food service industry before switching to management. Prior to Ruiz Food, he was president of $300 million Burns Philip Foods.
Alvarez quickly initiated a strategy to grow sales at Ruiz Food. He looked to penetrate markets, such as the Northeast, where the company had a limited presence. He also wanted to improve sales in vending machines, chain stores, and convenience stores, as well as strengthen the company's co-packaging business for other manufacturers. In addition, Alvarez was eager to offer new products, such as stuffed wraps, which were becoming increasingly popular. His efforts were so successful that Ruiz Food enjoyed a 20 percent spike in sales at a time when the industry saw revenues grow at just three percent. Alvarez was scheduled to take over as chief executive officer after three years, but because of his immediate success he assumed the post after one year on the job, becoming the first non-family member to head the business. Fred Ruiz remained committed, however, to keeping the company a family business. Part of Alvarez's job was to groom a third generation of the Ruiz family to one day take control. Two of Ruiz's children, Kim Ruiz Beck in her early 30s and Bryce Ruiz in his early 20s, already held management positions.
In 1999, Ruiz Food finally cracked the $100 million annual sales barrier and established a goal to reach $200 million within five years, with the ultimate target of $500 million. A key to the company's success hinged on product development, introducing new Mexican food items to keep pace with consumer's changing tastes. Although Ruiz Food prided itself on producing authentic Mexican fare, and retained Rose Ruiz to help in developing its recipes, it had always targeted a general market. As Ruiz Food expanded into overseas markets, it also had to take into account differences between countries as well as regional differences within countries. It was a fine line that the company was able to straddle successfully, as evidenced by its ability to significantly outpace its competitors in growth. To reach its ambitious sales goals, the company announced in 2000 that it was expanding its Dinuba plant by 65,000 square feet.
Alvarez, after achieving impressive results in a short period of time, unexpectedly resigned in August 2001 to take another job. Fred Ruiz once again stepped in to serve as CEO while a search for a new chief executive was conducted. In June 2002, the company settled on John Signorino, who had been the general manager of David & Sons in nearby Fresno. He became available when David & Sons' parent company, Nestlé, decided to sell the business. Signorino brought with him 25 years of experience in the food industry, including stints with Anheuser-Busch and the Nestlé USA divisions of Sunline Brands and Willy Wonka Candy Factory. As had been the case with Alvarez, Signorino was charged with managing the company's ongoing growth while also preparing the way for a new generation of the Ruiz family to assume control. A month after he was hired, as part of a succession plan, Kim Ruiz Beck was named vice-chairman of the company and began to take over some of her father's responsibilities. Fred Ruiz remained the chairman and continued to be actively involved in the business, making it clear that he hoped Ruiz Food reached $500 million in annual sales before he retired. In fiscal 2001, the company fell well short of that mark, with estimated revenues of $212 million. But with a fast growing Hispanic population in the United States and new products such as breakfast items driving domestic sales--as well as an expanding overseas presence, including penetration in relatively untapped Asian markets--Ruiz Food might very well make its chairman's dream a reality.
Principal Competitors: Jose Ole; Goya Foods, Inc.
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