Every day, more than two million corn tortillas flow through production lines at Delimex’s San Diego plant, but to the fast-growing company, tortillas are a means to an end. They wrap, they enclose, they layer, they enfold: tortillas provide the base for nearly every product made.
America’s taste for fast-lane, grab-and-go snacking stokes demand for the company’s frozen Mexican foods. But it’s the company’s strong investments in more efficient, more automated processing technologies that enable Delimex’s double-digit growth, which today supports more than $100 million in annual sales.
Earlier this year, the company completed a 3-year, 2-phase, $8 million expansion. Extended by 33,000 sq ft, the Delimex plant now puts 123,000 sq ft under one roof. The 22,500 sq ft added to the production floor allowed installation of a new flour tortilla line, additional corn tortilla lines, new freezing capacity and extra packaging machinery. The company also put in 9,500 sq ft for enlarged research and development facilities and more space for offices.
"Delimex is expanding the sale of its frozen food products to warehouse club and retail supermarket chains nationwide," said Kathleen MacDonnell, president and c.e.o. "The additional capacity and investments in new machinery will give us the ability to increase line speeds, reduce costs and improve the efficiency of our operations to keep up with the growth of the business. We also need additional room to manufacture the new products and varieties that are planned."
New machinery was much needed, according to Eric Brenk, vice-president of operations, who said, "Increasing our capacity has been our battle cry this past year." The changes raise manufacturing capacity by 21% to 117 million lb per year.
"This site will now support production that can generate $250 million to $300 million in annual sales," Mr. Brenk said.
CORN FUELED. Tamales got things started. In 1984, Oscar Ancira Sr., a retired industrial engineer, decided to try his hand at a new business: making frozen tamales. He formed Delimex, coining the company’s name from its product line, "delicious Mexican foods," and setting up manufacturing in Chula Vista, Calif.
Then came Taquitos filled corn tortillas. Their quick, at-home, microwave prep opened up the snacking market for Delimex. Taking cues from the emerging popularity of flour (wheat) tortillas, the company introduced Wrapidos filled flour tortillas and propelled itself into new non-Hispanic venues. Delimex also pioneered rice bowl products, supplying these items to club stores in the late 1980s, long before bigger brand names got into the market.
From a base of club store customers, the family-owned company expanded quickly. It also started private label production, supplying its frozen corn-based Mexican specialty foods to other food companies and independent food retailers.
In 1994, Delimex launched a thrust into retail distribution throughout the Southwest. Fast growth continued unabated, and soon the family decided the business would benefit from professional management. In 1997, they sold a majority interest in Delimex to Fenway Partners, Inc., a private equity firm based at New York City.
"The investors were very excited by the potential of the snacking market, and they saw a great platform in Delimex," said Bill Parker, vice-president of sales. "The new partners brought two vital ingredients to the company: capital and professionalism."
He noted that Fenway capital made possible a larger plant, already on the drawing boards at the time of the sale. And second, it brought in Ms. MacDonnell, Mr. Parker, Mr. Brenk and Dori Reap, the c.f.o. Mr. Ancira’s son, Oscar Ancira Jr., took over the company’s communications functions.
"The business has done well," Mr. Brenk said, "so our partners are happy to invest to support additional growth."
"Our market is snacking, and the major portion of our business is driven by kids," said Mr. Parker. "And if a kid expresses a brand preference, then the parents will continue to buy that brand."
Delimex now sells its products in more than 12,000 supermarkets and 80% of all club stores throughout the U.S. Distribution, via a network of 30 brokers, is supported by three regional managers for the food retailing market and two sales managers for the club store market. Its products can be found in the West and, more recently, in the Upper Midwest, east to Ohio. "We’re not yet in the Southeast or Northeast," Mr. Parker said, explaining, "This is intentional since Mexican foods sell less well in those regions. But we are laying the groundwork in those markets now."
Sales programs also target increased penetration rates. "We should have 10 to 15 items per store vs. the three or four we now have," Mr. Parker said.
In Mexico, the Delimex brand means something different: it’s the biggest name in pizza. In addition to pizza, the company’s 30,000-sq-ft plant at Monterrey, Mexico, makes Taquitos and tamales.
U.S.D.A. RATED. Located in an industrial development on the far southeast edge of San Diego, the Delimex plant sits a few hundred yards away from the Mexican border. Built to U.S. Department of Agriculture standards, it is, according to managers, the largest U.S.D.A.-inspected facility in the San Diego area.
A total staff of 570, including 14 people in the field, are employed by the U.S. division. An engineering staff of six maintains the busy plant, with one engineering manager, four engineers and one technical assistant.
Managers balance personnel needs with automation and expansion so the company keeps a stable permanent staff. Temporary workers help operations get through interim periods. "We have a great group of employees here, and turnover in permanently staffed positions is 1% or less," Mr. Brenk said.
The facility runs 12 lines. These include seven corn tortilla lines, one nacho line, one tamale line and one flour tortilla line. There are also two rice lines, one for bagged fried rice and the other producing rice bowl entrees.
"We now have space in the main production area for three future lines," Mr. Brenk said. "And you’ll notice that we use a lot of roll-in, roll-out equipment to boost flexibility."
Output is 90% corn and 10% wheat. "But that’s changing as we expand further into the Midwest," Mr. Brenk said. "Two years ago, we were 100% corn."
Delimex manages its raw materials on a just-in-time basis, keeping no more than five days worth of supplies onsite. Corn masa flour in 50-lb bags is delivered daily. So are rice and the pre-finished vegetables, meats and cheese products for fillings and sauces.
"We use as many prepared ingredients as possible," Mr. Brenk said. "Even though we have a fully implemented Hazard Analysis Critical Control Point program, this method of supply helps us hold down risks. Regulatory oversight of food safety will only increase in the future. So pre-finished ingredients make sense for us."
Another way Delimex controls food safety is by removing all boxes and bags in a staging area outside production zones. Here, an infeed conveyor accepts cans into an automatic opening and dumping system. Taken out of cartons, frozen vegetables and meats run through a microwave thawing system. These automatic machines convey ingredients into a prep area, where operators weigh, scale, chop and dice the materials as needed.
Sauce and filling ingredients are routed into the "kitchen" — here a collection of five large jacketed kettles, four FPEC injected mixer systems and an integrated Waukesha Cherry-Burrell pump and heat exchanger are used for further processing. On mixing, gillings and sauces chill quickly, moving from room temperature to 30°F to 40°F (-1°C to 4°C) in just three to four minutes.
FIRST FLOUR LINE. "During expansion, we installed the new flour tortilla line in an area that used to be a hallway," Mr. Brenk said. The new line combines a Peerless horizontal dough mixer, a W&P Tevimat dough divider and a Lawrence Equipment Mega flour tortilla intermediate proofer, tortilla press and oven. It produces up to 305 flour tortillas per minute for Wrapidos and quesadillas.
"Startup was effortless," Mr. Brenk said.
Previously the company purchased its flour tortillas from a manufacturer in Los Angeles. "Those tortillas came in fresh within 24 hours of manufacture," Mr. Brenk said, "but our new setup allows us to make tortillas and get them from the oven through filling operations and into the freezer in less than one minute. This means the consumer gets a much moister, fresher product, with less drying out or hard edges, than before."
Flour tortilla production currently alternates with tamale manufacture, but a new mixer will soon be installed, dedicated to preparation of corn masa for tamales.
"This is the original Delimex product," Mr. Brenk said. "This is where it all started. Our tamale formula is very traditional, but the manufacturing process is very modern."
Tamale dough is softer and even stickier than corn tortilla dough. The wet dough is first steam cooked by a continuous system, then conveyed to a Handtmann stuffer-style pump. Working in concert with a second Handtmann pump, tamale dough is co-extruded around a spicy filling and then portioned into individual pieces. Operators hand-wrap each tamale in a corn husk for the traditional finishing touch.
BAKE, FILL, ROLL. Operators dump corn masa doughs, prepared by two horizontal mixers installed on a mezzanine above the main production floor, through gravity chutes to feed the sheeters and ovens directly below.
"Taquitos are made at the rate of 400 per minute per line," Mr. Brenk said. "With seven lines, that comes to 2,800 per minute or a total of more than one million Taquitos per day."
Delimex devised its own proprietary method for filling, rolling, folding and sealing Taquitos and Wrapidos. The automated custom machinery turns out uniform pieces with minimal supervision. Previously, it took 14 people per belt to roll Taquitos. Now one operator supervises two lines apiece.
The formed Taquitos drop into Heat and Control conveyorized fryers. They dwell in the hot fat for 29 seconds to 32 seconds. A bucket elevator takes the lightly fried Taquitos to the infeed belt at the top of a new Frigoscandia spiral blast freezer.
The company prepares stuffed nachos for a private label client, although managers are considering introducing these under its own brand, too. Filling is deposited in dabs onto a sheet of corn masa, then covered by a second sheet and crimped into stuffed pyramids. These, too, get a quick fry before heading to a separate spiral blast freezer.
"This is a really great product," Mr. Brenk said. "They can be easily made in a home oven or small fryer. They are nice and crunchy on the outside and filled with a savory cheese or cheese-and-beef mixture on the inside."
While the newest of the three spiral freezers at Delimex handles tamales and quesadillas, managers plan installation of yet another spiral freezer, this one to take production from the additional Taquito lines planned for later this year.
PACKAGING PLANS. Packaging will soon be upgraded. At present Taquitos are hand-assembled into 16- to 60-count groups and manually inserted into clear plastic bags, which are then heat-sealed. Run through a Safeline metal detector and bag sealer, the Taquito package passes over a Ramsey checkweigher before it enters the Langen bag-in-box cartoning system. Operators load finished cartons into shipping cases and send them through a 3M tape sealer before stacking them onto a waiting pallet.
Wrapidos, tamales and quesadillas employ similar packaging methods.
Delimex is considering adding robots to take over counting and loading stages and an automated palletizer to manage shipping cases. At $4 million, this will be a considerable investment, but such methods will solve a persistent worker safety problem. "We focussed our safety program on minimizing the number of accidents very well," Mr. Brenk said. "Now most of the remaining problems involve ergonomics on the packaging lines."
The company operates an on-site 800-slot holding freezer, maintained at -10°F (-23°C), which Delimex managers describe as "a comfortable temperature for our products." Distribution, however, is assigned to an outside partner, Innovative Cold Enterprises. The distributor built its 80,000-sq-ft facility directly behind the Delimex plant.
"This allows us to stay out of distribution and focus on food," Mr. Brenk said.
THE NEXT NEW THING. New products are a fact of life for Delimex, but it is careful to bring out only items with the highest prospects for success.
"It’s expensive to introduce a new product," Mr. Parker said. "So, it’s important for a company our size to limit its failure rate. New products and product rotation are the right things to do. Not every product has to be a permanent addition to the roster."
Delimex’s research and development department, guided by its long-time manager, David Duenez, takes ideas from many sources. Every Monday, the whole R&D staff meets with Ms. MacDonnell, the c.e.o., and Mr. Parker, the vice-president of sales. "We go over what we hear from the trade, from customers, from our own travel and from what we see in restaurants, too," Mr. Parker said.
Concepts are tested with consumers on an idea basis, to probe price points and family preferences. To further narrow down the list of ideas, managers then work up samples, taste-testing them first among Delimex’s own staff for fine-tuning. When ready for the consumer, samples of the product along with packaging and promotion are prepared. These are shared in focus groups, usually of female purchasers and, sometimes, kids themselves.
If all signs read positive, the new product and its package are finalized. Production and sales roll out the item.
"We can do all this in a relatively short time," Mr. Parker said, with Mr. Brenk noting that most new items take only 90 to 120 days from idea to market. "That’s the beauty of working with a small, lean, entrepreneurial company," Mr. Parker finished.
EXCEEDING LIMITS. With the latest expansion, Delimex has maxed out its 6.425-acre site. "We ‘finished the limit’ on zoning codes," Mr. Brenk said, "so we will have to look at other solutions for future growth.
"This is a great problem for any company," he continued. "It’s fun to be part of a growing business. Our biggest challenge is finding enough time in the day to do all that we want to."
With demand growing at double-digit rates, Mr. Parker noted that sales efforts have not yet begun to scratch alternate channels. "It’s enjoyable to be part of such a fast-growing business and market," he said. "And what’s really great is that no one knows where the top will be."