Mixing things up: Blendex has new customers and product offerings in response to changes in restaurant industry
Business First by Kevin Eigelbach, Reporter
Date: Friday, December 14, 2012, 6:00am EST - Last Modified: Thursday, December 13, 2012, 2:22pm EST
Business: Custom blending, packaging and formulation for the food industry, primarily for food wholesalers but also for nutritional supplements
Products include: Pizza crust, breading, seasonings, batter and marinade
Address: 11208 Electron Drive
Employees: Number varies according to season, but average is about 75
When Blendex Co. was named small company of the year in Business First’s first Business of the Year competition in 2005, the company had plans to expand capacity by building a 90,000-square-foot building on its 12-acre site in Jeffersontown. Seven years later, the building remains a set of plans. The company did very well until 2008, said CEO and owner Ron Pottinger. But when the economy crashed, it hurt many restaurants the company previously did business with directly.
Blendex, a food processor that custom blends ingredients to create specialty mixes, typically made biscuit mix, hush puppy mix and other products that restaurants would buy and mix in their kitchens for customers. But when the Great Recession hit, to save on expenses, restaurateurs decided to do less on-site food preparation and instead buy ready-to-serve foods they merely had to heat up.“The trend we see in the industry, with the shrinking margins of the restaurants, (restaurateurs) don’t want to put a lot of labor in food prep,” he said.
Makes bigger batches for fewer customers
Consequently, the company has changed its mix of customers from restaurants to wholesale food distributors.Instead of making 300- to 400-pound batches of mixes to sell to restaurants, Pottinger said, the company now makes 1-ton batches sold to restaurant wholesalers.The wholesalers use the mixes to make food that they freeze and sell to restaurants.“Our business has really changed,” Pottinger said. “Almost all fried products now are pre-breaded and frozen. … All the operator has to do is throw them in the fryer.”The company now has fewer customers, but it has a more diverse mix of products, including nutritional supplements. Until the recession, the company expected 5 percent growth in revenue annually. But since then, revenue growth has been minimal or flat on an annual basis, Pottinger said. He declined to disclose revenue figures.
Financing has been obstacle to expansion
The company has reduced its staff by about 10 percent over the past four years, with automation replacing some of the employees who left, he said. “We’re probably more in survival mode,” he said. “I’m hopeful to see what the next three or four years have to offer.”If business picks up, the company will follow through with its plan to build the new building, which would boost the plant’s total square footage from 110,000 to 200,000 square feet. It also would provide the company with a state-of-the-art production area that would improve efficiency, Pottinger said.
One roadblock in the way of realizing the plans is getting a loan to cover the estimated $25 million cost, Pottinger said.In this post-recession era, banks want a personal guarantee — even for companies with excellent credit as Blendex has, he added.“We have a great credit reputation, but they say, ‘We still want you to personally guarantee this building,’ ” he said.But that’s not an option Pottinger plans to choose. “I don’t want to have to give up my house, or whatever, if things really do go bad.”