Lauren R. Hartman, Editor-in-Chief
To say that Don Pancho Authentic Mexican Foods, a Salem, Ore.-based tortilla manufacturer, has really grown in the last few years is an understatement. In business since 1979, the company is thriving, currently running three production facilities, an ever-expanding product line and state-of-the-art production capabilities. It was founded by past president George Puentes and his family members and named for his father, Francisco “Pancho” Puentes.
Opening a high-tech tortilla facility and corporate office in Salem, Ore. in 1995, the company also has a plant in Salt Lake City and last year expanded to the East Coast in Halifax, N.C. Overall, the company now produces more than 100 million corn and flour tortillas each year.
Snack Food &Wholesale Bakery visited this newest Don Pancho production plant in Halifax-affectionately called Don Pancho East-last year when it was barely open. At that time, it operated on a limited basis, but today, the scrupulously clean, 85,000-sq.-ft. plant is a showcase for tortilla technology. The plant now features the latest in flour and corn tortilla mixing, sheeting, dividing, baking, counting/stacking inspection and packaging equipment. It’s also environmentally friendly, and incorporates various energy-saving capabilties, including contained oven-heating discharges, sensor-activated lighting and materials recycling. Hearing about all of this, Snack Food & Wholesale Bakery made a follow-up visit.
“Part of our vision of becoming a national tortilla company dictated that we open a facility on the East Coast,” says Ricardo Baez, president of Don Pancho. The new Halifax facility is situated next to a salad plant owned by Don Pancho’s parent company, Reser’s Fine Foods, based in Beaverton, Ore. “So, it makes perfect sense in terms of synergies and transportation to be here,” he explains. “We’ll celebrate our one-year anniversary here very soon.”
Built from scratch
The multimillion-dollar Halifax plant was designed by the company’s tortilleros, or master tortilla makers, based on the successes and experiences of Don Pancho’s other manufacturing facilities. Don Pancho East now houses four main tortilla lines that are separated into two sides of the facility: A flour side; and a corn side. “We built this plant from scratch,” Baez explains. “The plant was specifically designed and equipped for producing tortillas. It was an empty lot a few years ago. We built it based on the plant in Salem and it improves upon the layout there. We gained a lot of great experience and put that into this facility. Production now has a better flow. I’d say that’s been our No. 1 change in the way we do things. We take into account the dimensions of our equipment, how the lines flow from front to back and how the product moves into packaging and into our warehouse.”
The Halifax operation runs 24 hours a day, five days a week, as does the other Don Pancho facilities. “That’s the kind of volume we have, and that also factors into how we design and build our plants,” Baez says.
To maintain the smoothest production flow, the tortillas are produced on a straight line layout and packaged in-line with manufacturing. “We want that linear flow to our production equipment and plant layout because it reduces the chance of cross-contamination,” says Steve Snyder, who was with Reser’s for 23 years before he came over as the new plant manager of Don Pancho East. “Once ingredients leave the raw state and go into a dough state and the baking process, anything that would be contaminated is killed by the high oven temperatures. From that point forward, we want the least amount of [human] handling as possible. We also want the least amount of backflow from where the process begins.”
Yet as a backup, the plant maintains a manual packing area. “That way, we are prepared for anything,” Baez adds. “You can never really get away from hand packing. If something happens to the equipment at the high speeds we run at [the plant can run as much as 60,000 tortillas an hour], we can keep on packaging and keep running.”
Baez predicates all of this on one thing: “For this plant to be successful, it really starts with our bakers. They ensure that we have consistent doughs, consistent recipes and start with baking product that’s consistent in size and weight so that it can stack correctly and can work with that equipment and the linear flow.”
Like the other Don Pancho facilities, the Halifax plant produces corn, flour, homestyle flour tortillas and flavored wraps as well as gorditas and tortilla chips. These are marketed to foodservice, the military and retail outlets, mostly under the Don Pancho brand as well as selected regional brands and Reser’s national Baja Café brand. The company serves independent restaurants, national and regional grocery stores and supermarkets as well as broadline distributors. Today, the products are distributed nationally in 45 states, which is up from 43 a year ago.
New flavors, better-for-you ingredients
Roughly 60% of the tortilla products are made for foodservice while the other 40% is for retail customers. Everything is made fresh for distribution, and that freshness is a critical aspect of the business. “We take a lot of pride in baking our products fresh and shipping them fresh,” Baez notes. “We want to create a national freshness. However, a small percentage of our customers do require their products be shipped frozen and we accommodate them.”
Overall, the company produces about 400 stock-keeping units (SKUs), including gluten-free varieties. The top sellers remain traditional 6- to 10-in. tortillas and flavored wraps, though new flavors and tortillas with better-for-you ingredients have just been launched. Product shelf lives depend on the product and customer requests, but range from 10 days to 45 and 60 days, shelf-stable.
“On the foodservice side of our business, the top sellers are our chips made from tortillas as well as our thick, table tortillas, enchiladas, fajitas and burritos,” Baez points out. “The large family-style packages of tortillas are designed mostly for Hispanic families that enjoy multiple tortillas at a time, so they’re also very popular,” he says. “This year, we had several new initiatives. We just introduced a lot of whole wheat products, and an extended line of flavored wraps to complement our traditional offerings. In corn tortillas, we launched a new blend of corn/flour tortillas to meet an emerging trend. We also developed a line of better-for-you products that we are extending as we speak.”
Listening to consumers, customers and the market so that it can react quickly is what Don Pancho is all about. We’ve done a great job getting ahead of the curve,” Baez says.
Colorful new packaging graphics have been designed for several of the products and callouts on the labels reflect the healthful benefits. The clear bags for the flat stacks of tortillas in several sizes are now resealable with a zipper closure.
Wraps are available in new varieties, including Garlic Herb, Spinach, High Fiber/Low Carb and Chile & Tomato, which were launched only a few months ago. Don Pancho also introduced ready-to-grill tortillas. A big initiative being applied to all of the products is a sodium-reduction, fat-reduction program, Baez adds. “We started to roll out lower-sodium products and those with a lower calorie, fat and sugar content. The launch has gone very well because these are the very same profiles we have in our existing products, delivered in a better-for-you formulation. We’re pleased with how well these products have been received.”
There is also a deeper transformation within the tortilla market category, he says. “Tortillas are now emerging as a ‘transporter’ of great food from around the world. This has tremendous impact on our business. We need to stay ahead of this trend to ensure we’re relevant and a leader in our category. We’re trying to find out how to fuse a tortilla with some variation of Middle Eastern flatbread for use with Middle Eastern foods. That will be a breakthrough,” says Baez. “We try to keep our finger on the pulse of the trends, with the world population constantly changing.”
But the company’s traditional 6-, 8- and 10-in. flour tortilla products are still in big demand, he mentions. “The top sellers in terms of shell diameter are constant, but it’s what goes into the shells to delivers a different experience-that’s what has changed.”
As its business keeps evolving and changing, Don Pancho strives to keep a step ahead, says Mark Haig, category manager for the company’s Eastern division. “In the past five years, the influence of new flavors and applications for tortillas has played a significant role. The increased demand for a tortilla that has better ingredients and provides more health benefits has been huge,” he says.
The food safety factor
Just as important to Don Pancho are the role of food safety and the impact of the updated Food Safety Modernization Act (FSMA), which has been an important piece in the development of the industry. “Besides adding state-of-the-art, high-tech production lines here in Halifax, we’ve also improved our good manufacturing practices (GMPs) by leaps and bounds,” attests Snyder. “We have strict sanitation standards and also implemented a hand-swabbing program for all employees who enter the plant,” he says. “This ensures that employees meet the standards, and we also make random quality assurance checks throughout the day for each shift. We have made a lot of food safety improvements. The FSMA has certainly had an impact on how we keep records and other things, but we’ve been practicing a lot of the required procedures all along.”
Currently, Don Pancho East is in the process of becoming Safe Quality Food (SQF)-certified through the SQF Institute, Arlington, Va. “We just completed this certification at our plant in Salem, Ore.,” Baez explains. “At that plant, we scored a 99.1. We look forward to that process here.” The plant is also inspected by Cook & Thurber regularly, is audited by the military as well as by Silliker for certain customers. Several times a year, the plant is inspected internally and by select customers who conduct their own in-house inspection services.
While it appears as if Don Pancho is immune to the difficult economic pressures most companies face in the United States, one of the greatest challenges the company faces is high commodity costs. “The economy has been tough,” Baez admits. “Like all of our industry peers, we have the same pressures everyone else has in being able to keep up with increases in commodity costs.
“We’re certainly not immune to it. From a commodities cost standpoint, it has been a very challenging year for our company as well as the industry,” he adds. “And the problem is that we don’t see a lot of relief in sight. As some of the larger population bases like China and India get more exposed to a westernized diet and as more American- and Western-based restaurants open up in those places, their diets will change. So there will be incredible demands for some of the ingredients and products we use.
“This is a time where it’s most important to work in concert with our suppliers and purchasing departments to ensure we have a strong partnership in dealing with this situation. We have long-lasting partnerships as it is with our vendors, so it’s crucial to keep those strong.”
However, Baez sees these tough times as an opportunity. “Since we last talked, we’re seeing a major increase in the awareness of the type of foods we eat and are moving into a world of information like never before,” he says. “We have been fortunate because we continue to add value for our customers in terms of baking a good, quality, consistent product every day. We really work with our team to maximize our efficiencies and try to cut out costs as much as possible throughout the system. What will keep our business going is to develop products that will meet current and future needs of our customers and consumers.”
A passion for what we do
While the company’s core customer base of Hispanic families has always been the most important group in its business, the core consumer is changing, Baez remarks. “Hispanic families have been with us from the start and now they have families and their kids have kids. We are thankful for this. But our core consumers are changing and we’re seeing newer generations experiment more with flour tortilla-based products and salty corn snacks. It’s interesting how more of our core is becoming the non-Hispanic customer. We try to target and educate new consumers about the multipurpose advantage of tortillas. They’re not just for eating enchiladas, tacos or fajitas. They can be used for sandwiches, pizzas and flatbread applications with Middle Eastern foods.”
It’s clear that the team at Don Pancho East loves what it does. “And it’s a team effort,” affirms Haig. “We have our own tortilla team here, and we’re selective about who is on that team. We all have passion at the company and the team of people here has that same passion. Keeping that passion going is the main thing.”
It’s difficult for Baez to point out any one main strategic advantage Don Pancho has over its competitors, but he concludes with this: “What makes us a premier tortilla manufacture is our relentless pursuit of excellence in manufacturing tortillas and tortilla-related products. Our customers continue to share with us their views of providing them unparalleled quality, continued consistency and care we take in partnering with them. The feedback we receive is very rewarding.”