Reser's Fine Foods, Inc.

15570 Southwest Jenkins Road
Beaverton, Oregon 97075
U.S.A.
Telephone: (503) 643-6431
Toll Free: (800) 333-6431
Fax: (503) 646-9233
Web site: http://www.resers.com

Private Company
Incorporated: 1950 as Mrs. Reser's Salads
Employees: 1,000
Sales: $375 million (2005 est.)
NAIC: 424490 Prepared Foods (Except Frozen), Merchant Wholesalers; 424420 Prepared Foods, Frozen (Except Dairy), Merchant Wholesalers

Reser's Fine Foods, Inc., is a leading national manucturer and distributor of refrigerated processed foods, principally prepackaged deli items such as salads, pasta, salsa, and chip dip. Reser's also sells cooked cut potatoes, meat products, dinner entrees, Mexican foods, and desserts. The company runs 12 processing plants, with facilities in Oregon, Utah, Hawaii, Ohio, North Carolina, Washington, Maryland, and Kansas. Founded in Oregon, the company is best known in the West, yet sells all across the United States and into Canada. It sells its products retail through big and small groceries, and also does wholesale business with large clients in the foodservice industry, including restaurant chains. Besides the Reser's brand lines of salads, potatoes, desserts, dips and spreads, meats, salsa, and deli case goods, the company also manufactures several other distinct brands. These include the Reser's Organic line of organic packaged foods; Baja Café, a line of Mexican entrees, tortillas, and salsa; Main Street Bistro, a line of fully cooked entrees and sides such as meatloaf and mashed potatoes; Potato Express, a line of cooked, ready-to-serve potatoes; Sidari's brand pasta and pasta sauces; and its Stonemill Kitchen brand prepared salads. The company was publicly traded from 1960 to 1986, but has always been in the hands of the founding Reser family.

A HOMEGROWN BUSINESS

Reser's Fine Foods, Inc., began as a small operation called Mrs. Reser's Salads, founded by Mildred and Earl Reser in their farmhouse kitchen in Cornelius, Oregon. The Resers had moved in 1949 to Oregon from Kansas, where Mildred Reser had also operated a salad business. In their new town, however, they worked in a restaurant, Earl as a cook, Mildred as a waitress. In 1950, the couple began Mrs. Reser's Salads as a sideline. Mrs. Reser cooked at home at night, making batches of up to 200 pounds of potato salad, and her husband worked as both salesman and distributor, delivering the product to area groceries and butcher shops. In 1951, the business took a huge step forward when Mildred got up the nerve to ask a local Safeway, a chain grocery, if it would consider stocking her potato salad. To her surprise, Safeway responded that it would like her to make enough potato salad not just for the local store but for all its outlets in Oregon. With this one large account, the success of the young company seemed assured, and the company left the family kitchen and established a com-mercial space in downtown Cornelius.

The whole Reser family, including son Al and Mildred's aged father, as well as many neighbors and former colleagues from the restaurant, found employment at Mrs. Reser's Salads. The company grew steadily, expanding into adjacent buildings for more production and storage space. Reser's technology was relatively primitive, and salads were made by the batch, with workers sometimes cooking and packing all night long in preparation for Sunday deliveries. The company's truckers also functioned as the sales force, asking around for more outlets for the Reser's line, which grew to four salads as well as gelatin. The trucks were not refrigerated in the early days, so the company relied on dry ice to keep the goods cool. Many independent area groceries took up Reser's salads, as well as area chains such as Chet's Market, Hank's Markets, and Tipton's.

Al Reser had been helping out with the business since he was 12 years old. He studied food science at Oregon State University, and in addition to working long hours at the company, he developed a new product, the company's first chip dip. This was a crucial product, as sales of salads ran high in the summer but slowed down a lot in the cooler months. The chip dip sold well in the winter, and soon accounted for about a third of Reser's sales volume. Then in 1960, Earl Reser started a new business in Seattle, a food brokerage company. Consequently, he sold his stock in Mrs. Reser's Salad to his son. Al Reser became president, moved the company to Beaverton, Oregon, and renamed it, incorporating as Reser's Fine Foods. At that time, the company had three or four refrigerated trucks, and brought in some $300,000 annually.

TAKING THE COMPANY PUBLIC

Al Reser was just out of college when he became president of the family business. Although he was only in his 20s, he had over a decade of experience. He was determined to take risks and think big in order to let the company grow. So very shortly after taking over management, Reser went to New York, found investors, and took the company public. In 1960 Reser's Fine Foods began trading publicly on the Over-the-Counter (OTC) exchange. With capital in hand, Reser's moved to much larger quarters, finding a 33,000-square-foot space in Beaverton. The company bought its first continuous cooker, meaning production could as much as triple from the old batch method. Though the new plant at first seemed much bigger than the company could use, Reser's soon ran out of space and had to construct additional cooler and freezer facilities.

The company found ways to balance its strong line of potato salads and other deli salads with products that would sell year-round. In 1967, Reser's bought German Boy, a maker of sausage and processed meats. The next year, Reser's began making tortillas. Tortillas were something of a novelty product at the time, and in the Northwest were principally available commercially only frozen or canned. Reser's was the first company to produce tortillas on a large scale in the Northwest, and though the venture at first seemed risky, the tortilla line sold well and the plant was soon at capacity.

The company continued to grow through the 1970s. As its production facilities became too cramped, Reser's bought a 16-acre lot in Beaverton. It built a new plant on the lot, opening a 52,000-square-foot factory in 1978. By that time, the Reser's product line had grown to some ten different kinds of potato salad, a dozen different chip dips, a handful of distinct macaroni salads, and at least 20 gelatin salads. Sales expanded all over the West, into Montana, the Dakotas, Wyoming, and Washington by the late 1970s. The third generation of Resers began joining the company around that time. Eventually all five of Al Reser's children found positions with Reser's Fine Foods.

FIGHTING OFF A TAKEOVER BID

Al Reser took the company public when he became president as a way of raising needed capital. He had been turned down by Oregon banks in his search for credit, but New York investors were interested in small companies with the potential for rapid growth. Much of the stock was owned by Reser family members and by company employees. In the early 1980s, Al Reser received a notice from the Securities and Exchange Commission (SEC) informing him that a Chicago investment firm had acquired 10 percent of Reser's stock. The firm had been moving quietly to buy not only Res-er's stock but the stock of some eight to ten similarly sized food companies, with the goal, evidently, of putting together its own food conglomerate. Within the next few years, the Chicago investor had acquired four small food companies, and it gobbled up over 40 percent of Reser's stock.

COMPANY PERSPECTIVES

From potato salad to mashed potatoes and dips to dessert, Reser's helps make your life easier so you can spend more time with your family and less time in the kitchen.

This was the downside of having taken the company public. With so much stock in its kitty, the investor was close to being able to enact a hostile takeover, perhaps pushing family management out. Reser's stock had been trading for three or four dollars a share when this activity started. Al Reser was determined to hang onto the company, but he had to pay a premium to do so. He set up a right-of-first-refusal agreement with employee stockholders, giving him the right to acquire their stock for a higher price if anyone else offered to buy it. This was an expensive but effective tactic that left the Reser family paying as much as $14 a share for Reser's Fine Foods stock. By 1986, the company had frozen out the Chicago interest, and the family took Reser's private again. The escapade had left Reser's in debt, while the takeover artist had profited handsomely. Nevertheless, maintaining family control was of utmost importance. Al Reser was extremely committed to the company, touring food processing plants and groceries even while on vacation, and always looking for new niche products. Revenue increased by 10 percent or more year after year under his tutelage, and reached $100 million by 1990.

The company became more sophisticated in the 1980s, matching its sales growth with technological innovation and new processes. For example, Reser's had had no in-house quality control until 1981. It had sent samples to a lab to meet quality control requirements, and such procedures as checking inventory were done by eye; if a bag of potatoes looked rotten, it was sent back. When the company hired a research and development director, the company's systems became much more standardized and scientific. Potatoes were not merely eyeballed but tested for percentage of sugar vs. starch, for example. Employee practices were improved, recipes were made consistent, and during the 1980s the company came to exceed industry standards for food safety and quality control.

ACQUISITIONS AND NEW PRODUCTS

As sales increased, Reser's plant had trouble keeping pace with production. In 1989, the plant was at capacity for salad, so Reser's bought a California manufacturer, Salad Host. Two years later, Reser's opened a 50,000-square-foot salad production plant in Topeka, Kansas. The company had three plants for its salads, in three states. It also acquired another salad maker in the early 1990s, the Memphis-based Mrs. Weaver's Salads. The Topeka plant did very well, but its busiest season was in the summer, and winter months were slack. Consequently, in the early 1990s, Reser's experimented with selling cut, cooked potatoes in pouches. These were sold in grocery store produce aisles. This was a new concept, though Al Reser had seen something like it in Europe, and it seemed to do well initially. However, Re-ser's was uncertain whether refrigerated potatoes was just a fad or a long-term trend. Reser's decided to gamble that refrigerated potatoes were here to stay. It expanded the Topeka plant, and growth in the refrigerated potato category took off. By the end of the 1990s, the Topeka plant could not handle all the volume, and Reser's broke ground on another facility, in Pasco, Washington.

The company added a marketing department for the first time in the early 1990s. Through the decade, Reser's reviewed and overhauled its packaging and graphics. The company had grown to include many different brands, either offshoots of Reser's lines or lines taken over from Reser's acquisitions. By the end of the 1990s, the company had a unified look despite the wide variety of products and brands it sold.

Reser's continued to acquire other small food companies. In 1993, it bought two Italian food makers, Bellissima Italia, Inc., of Oregon, and the Cleveland-based Sidari's Italian Foods. That year it also acquired Manor Hill Foods, a company based in Baltimore, Maryland. Both Manor Hill and Sidari's had been owned by a British food conglomerate, Geest Corporation Plc. Reser's also bought a half-interest in a Mexican food plant in Topeka in 1996. Mexican food was a real growth category, and Reser's stepped up its tortilla production. In partnership with the Topeka company La Siesta and an Oregon manufacturer, La Burrita, Reser's modified the manufacturing and marketing of its tortillas, aiming them towards the Hispanic market. Reser's then formed a partnership with another Mexican food manufacturer, Don Pancho, and transferred its tortilla production for the Western states to Don Pancho plants in Oregon and Washington.

KEY DATES

1950:

Company is founded in farmhouse kitchen as Mrs. Reser's Salads.

1960:

Son of founders incorporates business as Reser's Fine Foods; company goes public.

1978:

Beaverton factory opens.

1986:

After fending off hostile takeover bid, company is taken private again.

1991:

Reser's opens plant in Topeka, Kansas.

2002:

Reser's acquires Made Rite Foods and Wilson Foods.

By the mid-1990s, Reser's was selling its products across the United States, in Canada, Mexico, and also in some Asian markets. Salsa was its biggest seller, and the company made more than 200 different kinds of refrigerated salads. It also sold meats and sausages, desserts, and tortillas. Though it began life as a salad company, by the 2000s Reser's thought of itself more broadly as a refrigerated food company. Still a relatively small player, and with a dedicated management team that had seen the company through many changes, Res-er's was able to react quickly to possible market trends and try out new products. Al Reser constantly brought back ideas from his travels, and the company was a frequent innovator. Reser's steadily increased its exposure to the Mexican food market in the 2000s, acquiring part-interest in another Western tortilla maker, Puentes Brothers, in 2002, and also buying that year the Utah firm Wilson Foods Company, a maker of frozen burritos. It bought a refrigerated salad company in North Carolina, Made Rite Foods, in 2002, giving Reser's more access to East Coast markets.

A new development in the mid-2000s was a brand extension called Main Street Bistro. This was a line of fully cooked restaurant-style meals that Reser's positioned in grocery meat departments. A Main Street Bistro meal included a meat dish and a potato side—items that Res-er's had long made separately, but now were packaged together. According to the trade journal Refrigerated & Frozen Foods (May 2004), the so-called prepared meal category was a hot trend in the 2000s, growing at about 25 percent a year and bringing in a total of approximately $500 million across the category. Reser's had at first been somewhat reluctant to commit to prepared meals, but took the plunge at the beginning of the 2000s; by mid-decade, the company found itself one of the leading players in the niche. Reser's came out with a similar line of prepared meals with a Mexican theme, and marketed these under the brand name Baja Café.

By the mid-2000s, Reser's sales were estimated at around $375 million, and the company hoped its revenue would rise to $500 million over the next few years. The company had grown and consolidated, reaching beyond its Oregon roots with manufacturing plants in the Midwest and East and even in Hawaii. From making potato salad, its product line had grown to include myriad forms of cooked potatoes, fresh salads, prepared meals, tortillas, Mexican and Italian foods and entrees, salsa, dips, and desserts. Sales reached beyond the Western states to penetrate into Canada and Mexico and some overseas markets. The company remained private, with the third generation of Resers in top management positions.

PRINCIPAL COMPETITORS

Orval Kent Foods Co.; Bob Evans Farms, Inc.; Campbell Soup Company.

FURTHER READING

Garrison, Bob, "Meat and Potatoes," National Provisioner, May 2004, pp. 56-60.

Gonzalez, Cristine, "Reser's Rise," Oregonian, February 9, 1995, p. M1.

Hill, Jim, "Reser's Fine Foods Bags Bigger Market," Oregonian, March 19, 1993, p. D8.

Kadel, Steve, "Beaverton's Al Reser Keeps Eyes Open As Food Business Thrives," Oregonian, February 22, 1990.

Major, Meg, "All You Can Eat," Progressive Grocer, May 1, 2005, pp. 128-29.

Mitchell, Leslie, "Beaverton, Ore.-Based Reser's Acquires Wilson Foods of Utah," Salt Lake Tribune, August 8, 2002.

Riell, Howard, "Fridge Fresh," Frozen Food Age, February 2004, p. 60.

Suber, Jim, "Reser's: No Small Potatoes," Topeka Capital Journal, November 29, 1994, p. 1.