Pellerito Foods

Vegetables are perfectly capable of growing and thriving on their own, but tweaking and improving the conditions they grow in often is necessary to obtain the best results for our purposes. In the world of business, however, constant improvement isn’t only a nice idea, it’s vitally necessary for a company’s survival.

Take, for example, Detroit’s Pellerito Foods, a processor and distributor of fresh-cut vegetables including potatoes, celery, carrots and lettuce. The company has been in operation since 1943, but it has gone through a lot of changes since then. President Jim Pellerito explains that the company is on the verge of making some of its biggest changes yet – changes that he anticipates will turn it into a national player after decades as a regional powerhouse.

“The way things are going, we’re looking to grow five-fold over the next three years,” Pellerito says. The biggest and most significant change the company is undertaking overhauls its processes and prepares it to gain national presence, but there have been some smaller but no less important adjustments made by Pellerito Foods in the last few years, and all of them are adding up to one growing and thriving company.

Increased Capacity

Pellerito says perhaps the company’s most game-changing initiative at the moment is its investment in new equipment. Pellerito Foods is in the process of installing new processing equipment that will allow the company to continuously process vegetables. Currently, the company’s operations only allow it to process in batches, with downtime between each stage. The new equipment will peel, cut, cook and cool vegetables all in one continuous line.

This will have an enormous impact on the company’s output, according to Pellerito. He says the company will be able to process up to five times its present output, jumping from 2,000 pounds an hour up to as much as 10,000 pounds an hour. The new equipment also will substantially improve the shelf life of Pellerito Foods’ products, from its current shelf life of 21 days to as much as 45 days, making it much easier for the company to supply on a national level.

Having products that can last long enough to reach far-off customers doesn’t mean much if a company doesn’t have the means to reach them, though. To that end, Pellerito Foods has been working on building a network of partners to help it gain exposure in outside markets without increasing transportation costs.

The most significant of these partnerships is with distributing giant Sysco Corp. Pellerito explains that the company sells to numerous Sysco houses throughout the country, most recently using Sysco’s distribution to break into the Chicago market.

Although Sysco is a powerful ally for a company like Pellerito Foods to have, it also has sought out smaller partners that nevertheless have been able to help it move its products into new areas. For example, Pellerito cites a mush­room company that has distribution east of the Mississippi River and was looking to broaden its product offerings beyond mushrooms. Pellerito Foods has been working with that company to distribute its vegetables to the company’s eastern customers. Distrib­ution partnerships such as these are a big part of the reason why Pellerito believes the company is on its way to great things.

Forging Ahead

To keep up with those tremendous increases, Pellerito Foods has big plans for its facility in Detroit. The company is purchasing the property behind its building, which will double its land to four acres. It will break ground on an additional 20,000 square feet of processing space, and expects to have a total of 50,000 square feet by 2013. The project will cost about $8 million altogether, Pellerito says.

Although business is increasing for Pellerito Foods, and even though the company is eager to take advantage of it, Pellerito says the recession has made many banks timid about releasing the funding it needs for its expansion plans. Still, the company has forged ahead, thanks to its strong financial position and some help it receives from the city of Detroit. Pellerito says the company receives tax credits for various initiatives including hiring and operating on a former brownfield site.

In the short term, Pellerito says he sees an immediate increase in business of about 30 percent once the first phase of its expansion project is complete. From there, he says, becoming a national presence is not far from reality. “We’ll have the building and the space to do that,” he says.