Why Northern California family businesses opt to grow via outside owners — or don’t
When La Tortilla Factory’s president and CEO Jeff Ahlers on Jan. 27 finalized the sale of a majority stake in Jose and Mary Tamayo’s Santa Rosa-based company to an out-of-state food business, it was a deal that had been well thought out.
Over nearly 45 years, the Tamayos had grown their food-manufacturing business from serving Northern California restaurants and grocery stores, to a national enterprise that had the potential to go bigger. But they didn’t have the means to make that happen. Ahlers, who sat on the company’s board of directors for a year before being named president and CEO in 2014, had the experience to lead them forward. The 30-year food industry veteran had been involved in business transactions at other family-owned companies, and also held leadership roles at larger operations, including Safeway and Save Mart Supermarkets’ Lucky Stores division.
If the Tamayo family had just wanted to sell out for the most they could get, it would not have been difficult, Ahlers said. But the goal was to continue to grow La Tortilla Factory, keep its employees and maintain its connection with the community.
The family ultimately sold the majority stake of La Tortilla Factory to Idaho-based Flagship Food Group. Financial terms of the deal were not disclosed, but they plan to retain minority ownership and seats on La Tortilla Factory’s board.
“The number one thing for them through this, and for myself, was that we need to find the right partner that we can live with ongoing,” he said, adding he would advise any family business wishing to keep a minority interest the same way. “For the Tamayos, my counsel was you’re only going to do this once, so make sure you're really, really clear about what's important to you.”
The Tamayos faced a dilemma many family businesses do: whether they can grow their company without selling to another business or an investor. The experiences vary, leaving some happy and others wishing they had never sold.
In July 2016, Chris and Terry Martin sold Taylor Maid Farms, a wholesale and retail coffee-roasting business that began in 1991 on a 100-acre organic farm along Taylor Lane in Occidental, in west Sonoma County. The buyer was InHouse Ventures, a Healdsburg-based investment fund, Chris Martin said.
At the time, selling the company made sense, Chris Martin said, because he was involved in several other business ventures, some continuing to this day. He owns Howard Station Cafe, a restaurant in Occidental, and is co-owner of Loring Smart Roast, a commercial coffee-roasting manufacturer in Santa Rosa.
“I was having a hard time running Taylor Maid and doing everything in Occidental on the farm. But I made board meetings, and I had a CEO (Rob Daly) running it,” Martin said. “We were looking at taking the next step, which would be cold brew, but to do all that was going to be pretty costly.”
Martin said he was lined up to get a loan, but ultimately decided to sell.
“I was overwhelmed with so many other projects that I was kind of kind of OK with it,” he said. “It was either (sell) or I was going to have to go back in and run more of the business myself.”
If he had it to do over, Martin said, he would have kept Taylor Maid Farms (since renamed Taylor Lane Farms) and sold Howard Station Cafe, which he noted wouldn’t sell for much anyway these days.
“The coffee business is fun,” Martin said. “Going to countries and picking up at the farms is a little bit more of a simpler process than all the food and vendors and people it takes to run a restaurant.”
Costeaux French Bakery
Will Seppi, president and CEO of Costeaux French Bakery, plans to hang on to the Healdsburg company his family acquired in 1981.
“In business, you've got to be focused and plenty committed to what you're doing, and that's where I'm at right now,” Seppi said. “Despite the challenges, and especially over this last year, I'm enjoying what I'm doing. So that's ultimately what has to happen first and foremost.”
In fact, over the past several years, Seppi has added to the business.
In July 2019, Seppi acquired the pie business of Forestville-based Kozlowski Farms. The Kozlowski family at the time was winding down the business that was started about 70 years ago by Carmen and Tony Kozlowski, which the Business Journal reported at the time.
In addition to the main bakery cafe in Healdsburg, Costeaux has shops inside Big John’s Market in Healdsburg, Costeaux On The Go store at the Charles M. Schulz-Sonoma County Airport terminal and Tia Maria bakery cafe in Santa Rosa’s Roseland neighborhood.
Costeaux, which distributes its breads, cookies and cakes throughout Sonoma County and the greater North Bay area, won’t be going national as La Tortilla Factory has done.