Latino-Owned Firms Prospering in Slow Times

The recession hasn’t sliced into the sales of La Pizza Loca Inc. In fact, the 6-year-old restaurant chain’s sales soared 25% to $12.5 million last year.

“Everyone was worrying and talking about the recession. I decided to ignore the recession and get on with my work,” said Alex Meruelo, the energetic, 28-year-old founder of the Buena Park-based chain.

Meruelo increased the amount of jalapeno, chorizo and tocino (bacon) toppings on orders, opened five additional restaurants in Latino enclaves throughout Southern California and offered two-for-one pizzas for about $9. His strategy paid off: Meruelo expects sales to reach $16 million this year.

According to Hispanic Business magazine, La Pizza Loca is the third-largest Latino-owned company in Orange County and the nation’s 168th-largest. The national magazine on Monday released its annual list of the nation’s 500 largest Latino-owned businesses.

The Hispanic Business 500 includes 17 Orange County companies, the largest number locally since the magazine began the list in 1983. Total 1991 revenue of the Orange County companies was $191.3 million, down more than 6% from $204.8 million made by 14 area companies on the magazine list last year. The total 1991 sales of all 500 companies climbed to $9.94 billion, up 10% from last year, the magazine reported.

The Orange County companies range in size from Tru & Associates Inc., a Huntington Beach distributor of petroleum and lubricant products with five employees, to La Pizza Loca, with 800 workers, many of them part-timers. Most of the businesses are 100% Latino-owned, and Latinos make up from 6% to 100% of their employees.

Infotec Development Inc., the county’s largest Latino company, is another Orange County company to post increased revenues despite the recession. Despite defense spending cuts, the Santa Ana designer of software systems saw its revenue grow 32% to $68.66 million, which helped it move up six places on the list to become the 29th-largest Latino-owned company. About 6% of its workers--45 out of 750--are Latinos.

Air Conditioning Systems Inc., a La Habra air conditioning contractor, also improved its standing from 220 last year to 166. The company’s sales reached $12.5 million in 1991, up from $9.3 million the previous year.

“This year’s Hispanic Business 500 directory clearly indicates that sales are up in these tough economic times, due to expanding export sales, new product development and small-business growth,” said Jesus Chavarria, editor and publisher of the Santa Barbara-based magazine.

Five Orange County companies joined the Hispanic Business 500 for the first time this year: Roto Industries Inc. of Anaheim, which is the largest trash can manufacturer on the West Coast; Specialty Materials Co., a Santa Ana building materials distributor; Burtin Corp., a Santa Ana polyurethane foam manufacturer; Tru & Associates and Data Extras, a Yorba Linda office equipment supplier.

Two Orange County companies were dropped from the list as a result of new rules. Wisdom Import Sales Inc., an Irvine importer of Tecate beer and other beverages--ranked 31st last year with $56.1 million in sales--lost its ranking when the magazine determined that the majority shareholder is one of Mexico’s largest breweries. XCL Financial Services, an Irvine insurance and financial service firm, was removed when the magazine decided to consider only the company’s gross revenue instead of gross billings.

To qualify for the list, a company must be based in the United States and be at least 51%-owned by a Latino with U.S. citizenship.

California, which leads the nation in the number of Latino businesses, added two more companies to the list this year for a total of 134. Florida, which briefly surpassed California in 1989 as the state with the greatest number of Latino businesses, placed second with 112 companies, and Texas was a distant third with 67 firms.

Although California has the most Latino firms, the companies are relatively small compared to states with larger Latino communities, such as Florida and Texas, said Rick Mendosa, senior editor of the magazine. For example, Florida’s Latino-owned companies accounted for $2.8 billion in sales in 1991, while those in California posted sales of $1.9 billion.

“There may be considerably smaller companies than Florida or Texas companies (in California), but there is tremendous room for growth,” Mendosa said.

While the future seems rosy for Latino companies, many owners concede that it is becoming more difficult to expand in the Latino community. They are pressed to seek business elsewhere because larger companies are also seeking a piece of the Latino market.

Such was the case of Two Flags Wholesale, an Anaheim food distributor, and Roto Industries, the trash can manufacturer.

“It’s a very, very tough market. We had to look for new business nationwide. That’s how we got a contract to supply 100,000 trash cans to the city of Detroit and another 150,000 to the city of Phoenix,” said Jim Louderback, Roto’s sales manager.

Lucio Cabrera Sr., who owns Two Flags Wholesale, which ranked 372, said his company recently has begun to offer its own label on products to remain competitive, beginning with Chaveo’s Citrus Punch, named after his late father.

In a separate list of publicly held companies, Hispanic Business listed GB Foods Corp., the Anaheim parent of Green Burrito restaurants, in seventh place with 1991 sales of $8.5 million, which did not include sales from 39 franchised restaurants.

Latino-Owned Businesses

California leads the nation with 134 of the top 500 Latino-owned companies. It is followed by Florida with 112 and Texas with 67. The number of Latino-owned firms in Orange County rose to 17 from 14 last year. (Sales figures in millions of dollars.)

Nat’l Rank % 1991 ’92 ’91 Company, City Employees Latino Sales 29 35 Infotec Development Inc.*, 750 6 $68.7 Santa Ana 166 220 Air Conditioning Systems Inc., 18 61 12.5 La Habra 18 61 12.5 168 203 La Pizza Loca Inc., Buena Park 800 85 12.5 171 --- Roto Industries Inc., Anaheim 68 75 12.0 182 --- Specialty Materials Co.*, 20 50 10.6 Santa Ana 200 208 Cordova Bolt Inc., Buena Park 45 62 10.1 202 --- Burtin Corp., Santa Ana 16 N/A 10.0 205 174 Orange Coast Electric 35 23 10.0 Supply Co., Irvine 232 257 Borbon Inc., Buena Park 150 93 8.8 261 212 Savala Construction Co., Irvine 40 63 7.5 346 268 Independent Forge Co., Orange 49 92 5.2 372 438 Two Flags Wholesale, Anaheim 18 100 4.7 398 -- Tru & Associates Inc.*, 5 80 4.2 Huntington Beach 407 415 Omni Metal Finishing Inc., 101 80 4.1 Fountain Valley 414 405 Public Inc., Buena Park 20 98 4.0 482 --- Data Extras, Yorba Linda 24 13 3.2 484 475 Black Oxide Industries Inc., 38 74 3.2 Anaheim 38 74 3.2

* Infotec Development Inc. is 51% Latino-owned; Specialty Materials Co., 70%; Tru & Associates, 82%; the others are 100% Latino-owned.

NOTE: Independent Forge Co. and Data Extras are owned by Latinas. Information on percentage of Latino employees provided by the companies to the magazine or directly to The Times.

Source: Hispanic Business magazine

Researched by DALLAS M. JACKSON / Los Angeles Times