Team Ruiz

November 1, 2004
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Team Ruiz

By Bob Garrison
New products and a strong team culture help tortilla and frozen Mexican foods processor Ruiz Foods raise its game and excel in competitive markets.
Michael Lewis’ best-selling book, “Moneyball,” provides a fascinating behind-the-scenes look at the business of a major-league baseball team. Interestingly, one of the food industry’s most fascinating stories involves Ruiz Foods, a business that stands out for its winning teamwork.
And the similarities don’t stop there.
Lewis examined Major League Baseball’s Oakland Athletics, in part, because of what they are not. They are not in a major market. They are not a team known for superstars, a big payroll or even deep pockets. Even so, Oakland has posted one of the best regular-season winning records with a team that peaks at the right time every fall.
No less intriguing is Ruiz Foods, a private, family-run frozen Mexican food company that is also one of the largest tortilla producers and whose annual sales growth outpaces that of many larger competitors. Moreover, this 40-year-old company from the small town of Dinuba, Calif., appears to be just hitting its stride in the face of increased competition.
“There are many larger companies (in the frozen Mexican food market) with greater resources and access to public capital. Even so, Ruiz has done an excellent job developing a very competitive offering,” says Jay Novak, a director with the Chicago-based investment bank of Houlihan, Lokey Howard & Zukin. As head of the firm’s Food & Beverage Group, Novak has followed the company since 1999.
“The nation’s Hispanic population has been growing, and Ruiz has responded with innovative, on-the-mark offerings,” he adds. “Moreover, these items give customers substantial product selection at price points that deliver value to the consumer and margin to the retailer.”
Supermarket sales data support Novak’s assertion that Ruiz Foods is on target with value-oriented frozen entrees, such as family packs of El Monterey burritos. According to Information Resources Inc., dollar sales of the company’s non-breakfast frozen entrées rose 10.9% with an accompanying 6.3% unit volume gain during a 52-week tracking period ended July 11.
Meanwhile, Ruiz Foods continues to branch into the frozen snack category, where the company’s flour taquitos and a new line, Cruncheros have helped El Monterey post 52-week dollar and unit sales gains of 28% and 40.8% respectively, according to IRI.
Supermarkets, however, are only one piece of the puzzle for Ruiz Foods. For the record, the company sells to every channel of distribution and offers a 185-item product line. Annual company sales continue to grow by double digits, officials say. Although Ruiz Foods does not release sales figures, Hispanic Business magazine’s annual listing of top Hispanic-owned companies shows the company in the top 20 with $232 million in sales during 2003.
“We’ve been in this business for 40 years and have been growing at an extremely good rate,” notes Fred Ruiz, co-founder and chairman. “Now our segment is on the radar screen and big enough to draw interest from the large companies.
“I’d say we’ve learned — perhaps a little bit to our own surprise — that we can compete effectively,” he adds. “That’s certainly not something we take for granted. However, if you had to pick a category that’s on-trend with our nation’s demographics, frozen Mexican food is a great place to be. And while we transition from one family generation to another, I believe there still are tremendous opportunities.”
“We have many more ideas on the drawing board,” echoes Fred’s oldest daughter and company vice chairman, Kim Ruiz Beck. “Fortunately, we have team members with some amazing skills, so that makes our work easier.”
To her point, Ruiz Foods’ growth and culture have attracted many food industry professionals during the past four years.
“There’s not a fear of failure here and almost never an idea for building sales that Fred doesn’t like,” says Mark Hannay, senior vice president of retail sales and marketing. A food industry veteran of more than 30 years, Hannay joined Ruiz Foods in 2002 after stops with such venerable names as Ralph’s Grocery Co., Nestlé Prepared Foods and national broker Acosta Sales.
“We are a very sales-driven company, thanks to a flexible plant, a tremendous work ethic among our team members and a very proactive plant management group,” he says. “Our customers know that we’ll invest in a one-million-dollar idea, and some of the industry’s largest players invite us to go along for idea-generation trips. Then, we make them part of our new product development process.”
And that’s where the opportunities are, as demonstrated two years ago by Ruiz Foods and the 7-Eleven convenience store chain. According to Ruiz, 7-Eleven officials were dissatisfied with sales of hot dogs and other items prepared on in-store roller grills. Consequently, the chain contemplated removing the grills altogether.
That’s when Ruiz Foods product developers accepted the challenge. Sixteen months later, 7-Eleven’s national TV campaign launched a 3-oz., lightly fried and batter-dipped flour taquito that performed well on the grill. Named “Go-Go Taquitos” by 7-Eleven, the product was an instant hit.
“A lot of Mexican items don’t lend themselves very well to on-the-go eating,” a 7-Eleven official soon told the Fresno Bee. “Tacos and chalupas crack and spill. Fillings can squeeze out burritos and into your lap, and enchiladas require forks.”
Ruiz Foods soon developed its own proprietary product called Tornados for foodservice and convenience store accounts. And while developing its own entry in the taquito field (a flour version compared to corn rivals), Ruiz Foods worked on a retail snack version of Tornados. That line, Cruncheros was launched last year in the western half of the United States. Ruiz Foods also extended the snack concept beyond the taquito.
Cruncheros varieties include Chicken & Cheese Taquitos, Southwest Chicken Taquitos, Taco Beef & Cheese Taquitos, Nacho Cheese & Beef Mini Chimichangas and 3-Cheese Grilled Chicken Quesadillas. More consumers will find the product this year as Ruiz Foods expands distribution eastward. Aggressive retail support will continue, and a free-standing insert (FSI) drop was scheduled for the fourth quarter.
Back in Dinuba, meanwhile, retail product developers remain busy. Debuting in the spring of 2004 was a four-item line of El Monterey Carb Friendly products, each with only 6 to 12 net gm. of carbs per serving depending on the variety.
Initial offerings include Chipotle Seasoned Chicken & Cheese Burritos, Shredded Beef Steak Burritos, Chicken and Cheese Quesadillas and Shredded Beef Steak Quesadillas. Ruiz Foods bakes its own tortillas and — to ensure quality, quantity and consistency — the company developed its own low-carb tortilla formula.
“Now anyone on a low-carb diet can easily stay on that diet, while sharing a meal with the family,” Ruiz Beck notes.
Supermarket shoppers will notice still more from Ruiz Foods on the shelf. That is, to say, more appetite and eye appeal. Also rolling out this spring was packaging with new product photography, color backgrounds, graphics and an updated product logo.
“Our brand was built on price and value,” Hannay says. “Today, however, we’re highlighting convenience and noting, for example, that our products are ready in just two minutes.”
Ruiz Foods’ retail effort also focuses on customers. Behind the scenes, the company has hired salespeople and selected brokers experienced both with category management and consultative customer support. For that matter, Ruiz Foods also has worked hard to bolster customer support through logistics.
“Our customers have been consolidating nationwide, simplifying their business processes and product handling,” Hannay explains. “They have been asking for a national (Mexican frozen meal) solution because, until El Monterey, there has not been a frozen Mexican brand available nationally.
“It’s one thing to have a broad product line,” he adds. “Yet, to become a full-service supplier, we need to be able to respond to the needs of our customers in the best way possible. We needed to have a national (distribution) solution for our customers, and now we have (created) that by establishing a network of forward distribution centers.”
To keep pace with growth, Ruiz Foods now ships a portion of its inventory to several public frozen warehouses in the Midwest. These warehouses serve as distribution centers, incorporating Ruiz Foods product in consolidated truckloads to customers in the South and East.
Another critical organizational move was last year’s creation of a distinct foodservice group, headed by Lucio Kreimer, vice president of foodservice sales & marketing. A food industry veteran of more than 30 years, Kreimer oversees efforts directed to all traditional foodservice channels.
“The best is yet to come,” he says. “Our new structure allows us to better focus on business opportunities and service our customers. And because of what’s happening — consumers returning to eating out more often — we plan to significantly increase the size of our business during the next three years.”
Although best known for its retail brand, supermarket sales account for less than half of Ruiz Foods’ total company sales.
“We’re actually a solutions-based company,” he notes. “We have the capacity and capabilities that customers want. Moreover, we have a large, 300,000-sq.-ft. facility to do it.
“We know foodservice operators are looking for speed to market. We want them to know that we are faster and quicker than any of our competitors.  Where it might take a large company six weeks to develop a product sample, we can do it in 48 to 72 hours.”
Ruiz Foods’ foodservice sales team likewise takes a consultative menu selling approach, offering customers a broad product selection for every meal occasion. An in-house chef and foodservice R&D personnel develop Ruiz Foods’ formulas.
Accordingly, most of Ruiz Foods’ work is customized. Among the company’s newest original offerings is a three-item line of individually wrapped El Monterey home-style burritos for both vending and convenience store distribution. Varieties include Bean and Cheese, Ground Beef and Spicy Potatoes and Shredded Steak and Spicy Potatoes.
And where most of Ruiz Foods’ El Monterey packaging is bright and colorful, the new line embraces more of an off-white, butcher-wrap look to emphasize each product’s generous portion and homemade flavor profile.
On that note, Fred recalls how he and his father began the company with homemade recipes in 1964.
“As we celebrate our 40th anniversary, I am amazed at what we have accomplished,” he says. “But I know we could not be the No. 1 brand and the success we are if it weren’t for the partnerships we have earned along the way.
“We work hard … and will continue to work hard … to deserve each and every one of these relationships … in every level of our business. I see our future continuing on the same track with us only becoming stronger and better at what we do. We are a family-owned business, and we know Mexican food. It’s that simple … and that complex,” he says.
SBA, TIA Honor Ruiz And its Co-founder Intel, Hewlett Packard, Federal Express, Winnebago, Staples, Ruiz Foods.
What do these companies have in common? OK, so maybe the answer isn’t obvious at first glance, but each of these companies received assistance from the U.S. Small Business Administration at one point or another.
In 2003, the SBA celebrated its 50th anniversary by creating a “Hall of Fame” and recognizing 23 companies — all SBA program participants — as the first inductees. SBA marked the event with a trophy presentation in Washington, D.C., during the National Entrepreneurial Conference & Expo.
In addition to having received SBA assistance at some point, each nominated business was required to demonstrate exemplary leadership in the business community, outstanding innovation, sustained growth, job creation and outstanding dedication to community.
SBA provided loans totaling $275,000 to Ruiz Foods in 1977 and 1979. In 1977, the initial SBA loan was used to meet U.S. Department of Agriculture regulations. In 1979, when faced with the opportunity to double the company’s sales, Ruiz Foods once again turned to the SBA and used the loan to build a new 5,000-sq.-ft. warehouse.
This year, the Tortilla Industry Association inducted Louis Ruiz, co-founder and chairman emeritus of Ruiz Foods, into the TIA Hall of Fame.
Born in 1918 in Mexico, Louis Ruiz moved to California as a small boy, consistently demonstrating his entrepreneurial spirit. In the late 1950s, he brought his family to Tulare, Calif., and along with his brothers, opened a tortilleria. Here, they moved away from “hand-stretched” as they developed new ways to automate production while maintaining high standards of quality and consistency.
In 1964, Ruiz Foods was formed after Louis approached his son Fred with the idea to make and sell frozen foods. “We started with five enchiladas in a tray,” explains Louis Ruiz, “and the reason we started with five enchiladas in a tray is that’s the only tray we could buy.”
Today, Ruiz Foods is ranked as the 17th largest Hispanic-owned company in the United States and second among the top 10 U.S. Hispanic-owned manufacturing firms. Its plant in Dinuba, Calif., produces more than one billion flour tortillas and 84 million corn tortillas annually.
—by Bob Garrison and Dan Malovany

Sba, Tia Honor Ruiz And its Co-Founder
Intel, Hewlett Packard, Federal Express, Winnebago, Staples, Ruiz Foods.
What do these companies have in common? OK, so maybe the answer isn’t obvious at first glance, but each of these companies received assistance from the U.S. Small Business Administration at one point or another.
In 2003, the SBA celebrated its 50th anniversary by creating a “Hall of Fame” and recognizing 23 companies — all SBA program participants — as the first inductees. SBA marked the event with a trophy presentation in Washington, D.C., during the National Entrepreneurial Conference & Expo.
In addition to having received SBA assistance at some point, each nominated business was required to demonstrate exemplary leadership in the business community, outstanding innovation, sustained growth, job creation and outstanding dedication to community.
SBA provided loans totaling $275,000 to Ruiz Foods in 1977 and 1979. In 1977, the initial SBA loan was used to meet U.S. Department of Agriculture regulations. In 1979, when faced with the opportunity to double the company’s sales, Ruiz Foods once again turned to the SBA and used the loan to build a new 5,000-sq.-ft. warehouse.
This year, the Tortilla Industry Association inducted Louis Ruiz, co-founder and chairman emeritus of Ruiz Foods, into the TIA Hall of Fame.
Born in 1918 in Mexico, Louis Ruiz moved to California as a small boy, consistently demonstrating his entrepreneurial spirit. In the late 1950s, he brought his family to Tulare, Calif., and along with his brothers, opened a tortilleria. Here, they moved away from “hand-stretched” as they developed new ways to automate production while maintaining high standards of quality and consistency.
In 1964, Ruiz Foods was formed after Louis approached his son Fred with the idea to make and sell frozen foods. “We started with five enchiladas in a tray,” explains Louis Ruiz, “and the reason we started with five enchiladas in a tray is that’s the only tray we could buy.”
Today, Ruiz Foods is ranked as the 17th largest Hispanic-owned company in the United States and second among the top 10 U.S. Hispanic-owned manufacturing firms. Its plant in Dinuba, Calif., produces more than one billion flour tortillas and 84 million corn tortillas annually.
—by Bob Garrison and Dan Malovany

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