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Crunchy Foods, Other Gourmet Food Makers, Move To Oakland - Montclarion

And on top of all this, we've got more great farmers markets than ever before.

Oakland attempts to woo gourmet food industry
By Marton Dunai

STAFF WRITER - MONTCLARION

Karen Robert Jackson always wanted to get into the food business.

A successful filmmaker at Pixar with such hits as "Toy Story 2" under her belt, Jackson decided to realize her dream two years ago and teamed up with her husband to buy Crunchy Foods, the San Francisco-based makers of Suzy's Biscotti and other fine bakery products.

"We were looking for the next thing, a company that wasn't necessarily high-tech, but we could do some process improvements through better planning, tracking, forecasting," she said.

To make these changes would require moving to a place double the size of the San Francisco location, she said. The problem: There was no suitable and affordable place in San Francisco.

So Crunchy Foods relocated to Oakland last year, joining a recent throng of small- to medium-sized food businesses. Driven by a lack of affordable, suitable or available space in San Francisco or Emeryville, many food companies have moved to Oakland.

The city of Oakland actively seeks such businesses, trying to fill the void left after traditional, industrial-sized food companies left Oakland in the past few years.

Bought by global investors and subject to competition from states where the cost of business is much lower, traditional food giants such as Fleishmann's Yeast, Red Star Yeast and Mother's Cookies left, robbing Oakland of some of its most venerable brands and hundreds of jobs.

Smaller, high-end food companies, however, have found Oakland attractive. The existing industrial infrastructure, as well as the proximity to freeways, railways, ports and airports, makes the city a powerful contender for these businesses.

The city is in the geographic center of the Bay Area, close to a market with a big appetite for gourmet products. Making the most out of this strategic advantage over other parts of the Bay Area is a big part of Oakland's plan for its food sector, which accounts for about 4,000 jobs.

Home to a large-scale food industry ever since the first tomato canneries located near the city's railroads, Oakland hopes it can replace that industry with high-quality food production targeting primarily local markets. Indeed, the city is actively trying to lure these companies, offering them a variety of incentives from professional help to assistance in identifying potential production locations.

"I had special needs. I wanted to customize the new location to fit our needs, bringing in gas, electrical upgrades, and make sure it had the flexible internal arrangements that our constantly changing inventory requires," Jackson said.

With help from Oakland officials, she found a former warehouse facility. It had a loading dock, which was important for the 18-wheelers that bring the ingredients and take away the cookies. It also has a convenient roll-up door, as well as a secure location.

Proximity to public transit also was an issue. For her employees to make the move from San Francisco, it was important that Jackson remain near a BART exit, a bus line on San Pablo Avenue and close to a freeway access.

"It's one of the things that you get when you're in a central location. The farther out you go, the more you lose this access," she said.

While new companies contemplate coming to Oakland, some of the older ones bless their luck to have been here for as long as a century.

Few companies have been as integral a part of the Oakland food industry for as long as Saroni Foods, which supplies ingredients to bakeries and canneries in Northern California. The company's founders fled San Francisco after the 1906 earthquake, and the shop they set up that spring has become a perennial Oakland fixture, and still dominates its small, niche market.

Saroni's present boss, Dick Garabedian, said he had no plans to move. He said he has a good lease, and "the infrastructure that was built here in the past 100 years." His own warehouse and his fleet of trucks enables him to ship his products all over the state. But not beyond. He said the key to its success was restraint.

"You're either a giant or you're a niche player. There's no middle ground," said Garabedian, who joined the company in 1993 and eventually became its owner.

Garabedian, who had worked for an economic development association of Bay Area mayors before joining Saroni, said size will decide what kind of food companies can stay in the Bay Area and remain profitable. Of the 1,600 Northern California food processing companies, 1,000 have fewer than 20 employees, and only 20 have more than 500, he said.

"When you have 19 employees, you won't go to Nevada to service this market. Besides, most of these food shop owners are local ... so they want to stay close to where their roots are planted. There are more roots planted in the Bay Area than anywhere else I know," he said.

Tom Frainier's roots are as firm as anyone's. As co-owner of Semifreddi's, he has been in the high-end bakery business for 22 years, 17 of them at the company's current Emeryville location.

Although his lease on the 20,000-square-foot facility doesn't expire until 2011, he's under pressure to look elsewhere. Pixar Animation Studios, which owns the entire block, is anxious to move him out and expand into the one-third of the building it doesn't already occupy; so much so that they offered him a nice chunk of cash to end the lease early.

Realizing that his bakery is bursting at the seams already, Frainier and his business partner Mike Rose took a look around the market and found that the type of facility they have now will be immensely difficult to replicate in an affordable way. He is looking for something in the most popular segment: 30,000- to 40,000-square-foot facilities.

Proximity to their markets is so important, though, that they concluded they wouldn't likely go much further than Oakland.

"The large majority of my market is within 12 miles from here," Frainier said. "I ship from San Jose to Vallejo, but most of my business is in the East Bay, San Francisco, or the nearer parts of Marin."

Frainier has contacted the city of Oakland, which is trying to find him a place to move. What he has now will be hard to replicate.

The historical brick building has high ceilings, a flood of sunlight and a central location in a clean neighborhood within shouting distance of the Interstate 580/80/880 maze. An in-building cafe sells his gourmet breads, his croutons on the salad and his cookies with the coffee. Customers can hang out on a cozy patio.

The best thing, however, is a $23,000 sound system that constantly fills the production facility with music.

"Nothing beats blasting AC/DC's 'It's a Long Way to the Top' while you make bread on a Friday night," he said recently, walking around the tightly packed flour silos, bread-raising machines, ovens and the single small refrigerating room. "I love music. That system was worth every penny."

Frainier loves his location and would prefer not to move, but understands that he has no choice. With his landlord waiting to kick him out and his business already too big for its home, come 2011, he said, "We're definitely out."

Growth, however, has to have its limits, he added. His next location will be one for the very long term. In 22 years, his company has yet to spend a dime on advertising. He's going to gross $10 million this year, supports 120 employees, and tries to make the best bread in the world. His market?

"The Bay Area's market enough. There's 5.8 million people here, and I don't think more than half a million know who we are," Frainier said.

While giant food companies are likely to supply a large chunk of the food eaten in the Bay Area, smaller, local companies can ensure variety as well as a healthy choice of fresh foods. If the city of Oakland has its way, this will be policy soon.

A new study that the city commissioned from a group of researchers at UC Berkeley shows that smaller food companies are indeed targeting Oakland as a business location, but it goes a step further. The study recommends that the city strive to get about a third of its food locally.

"If all your food comes from elsewhere, your system is fragile," said Randy Hayes, an environmentalist who led the research effort at Berkeley and was the city's first sustainability director. "Regional self-reliance" is therefore important, and now is an opportune moment to develop that system, he said.

With transportation and energy costs increasing, making food too far from where it's consumed will be a losing proposition. With the oil-based economy expected to peak soon, the natural way forward is to develop local resources for food, the most important of commodities, said Hayes.

That this locally produced food often means high-end gourmet food in the Bay Area is only natural, said Serena Unger, one of the authors of the assessment.

"We're in the Bay Area, the boutique of gourmet, where people constantly want to get into the food business, whether producing organic jams, or bread, or coffee. It's just part of our culture," she said.
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