Santa Rosa’s La Tortilla Factory sells controlling interest in US food business

A homegrown Santa Rosa maker of Mexican spices and tortillas started in a small storefront, before growing into a formidable county food processor, now plans to expand its national prowess having ceded family control to an outside investor group.

La Tortilla Factory has sold a majority stake in the company to Idaho-based Flagship Food Group, the local Mexican packaged food manufacturer said Thursday.

Founded in 1977 by Jose and Mary Tamayo, the family business grew through the decades from serving Northern California restaurants and grocery stores to become a national enterprise.

The privately owned company, known for its wide selection of tortillas and Mexican sauces, employs about 300 local workers and plans to retain all of them, company officials said. That workforce ranks La Tortilla as the second-largest food producer in Sonoma County behind Petaluma-based Amy’s Kitchen, which has about 930 workers.

La Tortilla’s Chief Executive Officer Jeff Ahlers said the company sought an investment partner to bolster production capacity and bolster its geographic reach around the country.

About three years ago, Ahlers began having conversations with the Tamayo family about how to keep growing the company while staying true to La Tortilla’s local roots.

“When we put together a strategy to achieve those goals on a national scale, it became clear that we were going to have to keep making investments in this business,” Ahlers said. “And that’s a lot to ask of a family-owned business.”

After closely vetting potential investors, the CEO and Tamayo family members settled on Flagship Food, owned by Denver investment firm CREO Capital Partners. CREO Capital’s investments include 20 brands and Flagship’s 505 Southwestern, Lilly B’s, TJ Farm’s and Hatch Kitchen are among them.

The financial terms of the deal, which closed on Jan. 27, were not disclosed. The founding family plans to retain minority ownership and seats on the La Tortilla board. However, it’s unclear what portion of the company remains in local hands, other than the share is less than half of the business.

Rob Holland, a CREO Capital founding partner, said the firm doesn’t intend to make any major operational changes at the Santa Rosa food processor or move its production plant out of Sonoma County.

“We really want La Tortilla factory to be the premier California tortilla brand,” Holland said, adding that employee layoffs are “absolutely not on table at this stage.”

The priority, Holland said, is to support La Tortilla’s growth, noting his company has invested millions of dollars in factory expansions at its other businesses in the United States and United Kingdom.

With the new ownership deal in place and resulting capital infusion, La Tortilla plans to add another processing line at its Santa Rosa plant to boost production of existing products, Ahlers said. The company, which distributes to all 50 states and Canada, will focus on increasing its presence throughout the country, particularly in Southern California.

In addition, La Tortilla plans to invest in developing new packaged products. The company declined to reveal details, but in recent years it’s introduced new sauces and pre-made meals.

La Tortilla intends to ramp up hiring based on customer demand, Ahlers said. Last spring, the company hired about 20 employees at the onset of the pandemic as many local businesses were shedding workers.

In April, the company disclosed one positive COVID-19 infection among workers at its 75,000-square-foot plant. Officials declined Thursday to say whether there have been additional virus cases or outbreaks there, but said the plant maintains strict social distance protocols and provides personal protective equipment to its employees.

Ahlers said even as La Tortilla expands with CREO Capital in financial control, it will continue prioritizing the well-being of employees and maintaining a strong presence in the Sonoma County community.

“I passionately want to make sure that culture doesn’t change,” he said.

Peter Rumble, leader of the Santa Rosa Metro Chamber of Commerce, said the majority ownership change should be a positive for the local economy, potentially adding new good-paying jobs at the company.

“The ethos of the Tamayo family is to take care of their employees and their community,” Rumble said. “I would hope that continues.”

Besides putting people to work, another way the Tamayos support the region is through philanthropy. The family has donated and helped raised money for local causes through the Breast Cancer Research Foundation, Sutter Pacific Medical Foundation and the Salvation Army.

The family supported local nonprofit Social Advocates for Youth, in opening Tamayo Village, a transitional housing complex in Santa Rosa for former foster youths and homeless young adults.

In December, when La Tortilla Factory was unable to host its annual holiday meal at Tamayo Village due to the pandemic, it sent made-to-order burritos and gift boxes instead.

“We’re very lucky to have the warmth and loving arms” of La Tortilla company family “wrapped around our youth,” said Dennis Agnos, chief development officer for Social Advocates for Youth.

Jenny Tamayo, granddaughter of La Tortilla’s founders and people and community engagement manager at the company, said the business will maintain its charitable commitments under new majority ownership.

“It was important to us that we found a partner who understood that being involved and supporting the community is part of who we are,” she said.

Before launching La Tortilla Factory over 40 years ago, the Tamayo family owned a “Mexicattessen” selling Mexican spices, chilies and tortillas out of small storefront on North Dutton Avenue.

In the late ’70s, the family noticed a growing interest in tortillas at grocery stores. And as Jose and Mary Tamayo planned to retire, the company shifted its focus to packaged tortillas. The couple’s five sons, recently back home in Santa Rosa from college with business degrees, soon moved into a new plant and steadily boosted production.

“Their education was an enabler, to be able to put that education to work and find a market need and fill it,” said Sam Tamayo, a grandson of Jose and Mary who will serve on the La Tortilla board.

With news of the change in company control, Ahlers said he expects to hear from some customers concerned about the strategic direction now that it’s no longer an entirely family-owned business.

He will assure them the move is only a continuation of the expansion La Tortilla has pursued since its humble start.

“I feel like the company has a brighter future than it's had since I’ve been here,” Ahlers said.

Editor’s note: An earlier version of this story mischaracterized the Tamayo family’s work with Social Advocates for Youth. The family supported the local nonprofit in opening Tamayo Village, a transitional housing complex in Santa Rosa for former foster youths and homeless young adults.

You can reach Staff Writer Ethan Varian at ethan.varian@pressdemocrat.com or 707-521-5412. On Twitter @ethanvarian