Industry: Industrial & Equipment
Products: Commericial ranges, griddles, broilers, fryers, and ovens
CEO Peter Spenuzza is leveraging automation and inventory control to keep pace with an ever-changing market.
After working in the food-service industry, Pete V. Spenuzza started Imperial to manufacture commercial griddles and broilers, largely for steakhouses in California, more than 60 years ago.
Peter, Pete V.'s son, first worked at the company as a kid. "I came to understand manufacturing very well," says Peter.
But he left the Golden State for college and his subsequent career. Before coming back to the family business, Peter worked as a financial consultant on the East Coast in the 1970s. That's when he got an idea. "One of the growth industries was going to be food service, and particularly fast food service," he says. The boom had a geographic wrinkle: "We knew most of the manufacturers were in the East, but the most of the population growth was going to be in the West."
That got him convinced of Imperial's opportunity to catch a wave. "I bought my father out in 1980 and he went to retire," says Peter.
The market was very fragmented at the time, with some manufacturers making grills, others focused on ranges, fryer specialists, and so on. "My idea was to consolidate it all under one roof," says Peter, who moved the company from Los Angeles to Duarte, California, in 1986.
Imperial's catalog expanded to include fryers, griddles, and ovens of all kinds. The company also started making specialized equipment for Japanese, Chinese, and Mexican restaurants.
Peter used the "80/20 rule" while building a bigger selection: 20 percent of products will generate 80 percent of sales. "Select the most popular model and make it easier for the dealer," he says of the ethos.
As it became something of a one-stop shop for commercial kitchen equipment, Imperial moved from primarily supplying Western steakhouses to a much broader market. With that shift, the company grew from five employees in 1980 to 300 in the 2000s. Growth "was steady," says Peter. "I wanted more, but it was a steady march."
"The next major leap we had was in 2008 when we decided to automate," says Peter, noting that Imperial's products "lend themselves to automation."
The move improved efficiency and product quality, as the number of employees dropped by about 50 percent from 2008 to 2016. "We virtually have lights out manufacturing. At five o'clock in the afternoon, we turn off the lights and our machines are still cutting, forming, and welding robotically unattended."
Besides the reduced labor costs, Imperial can also carry lower inventories of fabricated parts. "That helped a lot with cash flow," says Peter. "Our bottom-line margins improved by 50 percent, and a lot of it had to do with our labor costs."
But the investment in automation did not happen in a vacuum. "What prompted a lot of it was the recession," he explains. "That forced us to really give a very thorough look at all aspects of our company, and there were no sacred cows. . . . When you're in growth mode, you're a little blind."
It also coincided with a decade of rising consolidation and offshoring. "Many companies in our industry are multinational conglomerates," says Peter. "They've cut out a lot of the models. We've gone the other way."
Imperial continues to fill niches for specialty items, like oversized, open-flame chicken broilers for El Pollo Loco and yaki griddles for Benihana, and also counts chains like Applebee's, Olive Garden, and Red Lobster among its customers. "Our top-selling products would be range products, next would be fryers, and next would be griddles and broilers," says Peter.
Much of the company's work is custom. "We can engineer a product and get it out the door a lot faster [than larger competitors]," says Peter. "The pendulum swang from 80/20 to the other way."
Imperial moved into its 100,000-square-foot facility in Corona in 2004. "We designed it from the ground up," says Peter. "We had the privilege of creating a flow the whole way through."
Sales have eclipsed $50 million in recent years. About 80 percent of sales go to domestic customers, and 20 percent are exports.
The company's structure helps maintain a high level of quality."I'm the sole owner. It's a private, family-owned company," says Peter. "There's a lot of pride in the product and service."
And for restaurants, which often depend on cooking equipment 24/7, 365 days a year, reliability is critical. "They won't tolerate equipment failure," he says.
Adds Peter: "Integrity. That's a word that's thrown around a lot, but we say what we mean and mean what we say."
Challenges: "The immediate challenge we have right now is some of the tariffs," says Peter, noting that the price of sheet steel has been on the rise. "We've been buying American sheet steel for a long time," he says. But domestic suppliers raised their prices by 22 percent when Chinese sheet steel was slapped with a 25 percent tariff.
Peter describes a "double whammy" when it comes to tariffs: "They didn't put a tariff on finished commercial equipment." Offshore competition "effectively got a price advantage," he says. "They didn't think it out."
And there's a ripple effect. "Suppliers of screws to motors and metal knobs have raised their prices," says Peter. "I hope it doesn't escalate too much." Imperial might need to hike prices in early 2019 in response, but it will likely be more incremental than its steel suppliers' increases. "It seems very radical to go up 15 percent," says Peter.
He says the tax bill's elimination of the Domestic Production Activities Deduction is also having a negative effect on Imperial. Environmental regulations also present a challenge, and often spur manufacturers to move to Arizona and Nevada, he adds.
Opportunities: "Our growth drivers are still fast-food chains," says Peter. "There's a lot of them." Noting that there are 35,000 McDonald's locations, he continues, "We focus on the mid-market -- chains that have 2,000 stores. Chains that have less than 5,000 are neglected by the conglomerates. . . . We are able to service them well, react quickly, and develop prototypes."
Needs: "One of the things we need is to position ourselves for more international business," says Peter. "We have to come up with a way to greater enhance repair and warranty services. We have to make some choices -- there are a lot of countries out there."