At the onset of 2020, Pacific Fine Foods was set to have their best year on record. They’d already completed a 6-week stint catering for The Matrix film crew, plus a 1,200-person event in San Francisco’s Fort Mason. Two weeks later, the entire state of California went into lockdown and the survival of Kelly Kearney’s business was in question. Yet, with her strong business acumen, she was up for the challenge.
Prior to becoming a small business owner, Kearney was a very successful Sr. Sales Executive. However, after 17 years in corporate America, she grew tired of the commute; her employer, a major telecom company, was struggling, and she was ready to take her future into her own hands. Pacific Fine Foods, a catering company in Alameda, California was just 7 minutes away from her home and the owner needed to sell the business due to health issues. Having previously attended cooking school and trained as a food stylist, Kearney decided it was an ideal acquisition.
In order to grow the business, Kearney knew she had to expand its customer base. That’s when she approached Kaiser Permanente in the neighboring city of Oakland. “I got lucky. One of the first meals I did was for a high-level Kaiser executive who eventually became CEO. He implemented a company-wide initiative to promote holistic wellness using ‘thrive’ food,” Kearney explains. She quickly got into action and created a menu filled with green, organic, and clean food.
Before she knew it, her company was featured on Kaiser’s website, accompanied by a policy for employees that allowed them to only expense organic, healthy meals. With a little luck and a lot of business intuition, Pacific Fine Foods was soon catering for dozens of teams at Kaiser. Shortly thereafter, through a referral, the company was catering at the nearby University of California at Berkeley.
Fast forward to the present and Kearney has been able to continue that success, in large part due the quality and uniqueness of her offering and tremendous staff. Pacific Fine Foods employs 17 talented individuals to present meals that are both stunning and appetizing. She treats her employees like family, which helps keep turnover low. Unlike competitors, Kearney doesn’t keep a fixed menu year-around, which gives the company an edge over national franchises that offer basic meals at a lower cost. Most important of all, she loves what she does.
“You have to have fun though,” Kearney adds, “If you’re not having fun, customers notice that. Especially with food. You definitely notice it with food.”
Surviving the Pandemic
After it was clear that the pandemic was not going to end soon, Kearney decided that sticking to corporate catering was not going to suffice. She then adjusted her business model to deliver lunches and dinners to individuals, while dropping the minimum order amount. To reduce costs, Kearney furloughed more than half of her employees, bringing them back slowly as business picked up. As added relief, Kearney applied for a disaster recovery loan, which she received right away, followed by a second loan, the sum of which helped pay rent and payroll. Later, when she got a PPP Loan, she paid off all additional debts. “I wanted to keep this all in the black,” Kearney said.
With costs under control and the balance sheet positive, it was time to move from survival to opportunity. In a flash of creativity, Kearney began hosting car concerts in an area of her property she calls the lanai. Drawing inspiration from Hawaiian barbeques, Kearney redesigned the space behind her business and decorated it with palm trees and bonfires. Before the pandemic, Kearney would rent this space out for corporate events or family gatherings.
For entertainment, her husband’s blues band plays music in the lanai and locals park nearby to listen. To accommodate social distancing, customers can order food and drinks through the online store, then pick up their order from the front of the business. Sitting in lawn chairs placed at 6-foot intervals, customers enjoy Kearney’s food and a local bartender’s drinks, making these car concerts a hit.
Selling a Business During the Pandemic
Prior to the pandemic, Kearney was not considering an exit, but that changed in June, when her father died. It was then that she decided to begin the process of selling. To make her business more attractive to buyers, Kearney established a digital marketing presence, using MailChimp to send out customer emails while also modernizing her website and leveraging a Facebook grant to develop a paid social media strategy. Perhaps most laboring, Kearney digitized 20 years’ worth of records to allow for easy transfer to an incoming buyer.
To attract buyers, Kearney created an online business-for-sale listing and by August, was in talks with three serious buyers. While each buyer was local with previous business experience, Kearney wanted to stay on for a short period to help a new owner be successful.
“I wanted to give whoever buys this business the tools that I have, show them what we did to be successful, and then let them make their own changes. I just want to help them get there,” Kearney says.
One of Kearney’s biggest concerns in exiting was the security of her staff, and after negotiating with multiple buyers, she knew the solution. She’d sell it to her employees. It was then that she called off external negotiations and proposed the idea to a group of her staff, to which they agreed, keeping Pacific Fine Foods in the family. As planned, Kearney is staying on for the next 18 months, as the economy recovers to help ensure Pacific Fine Foods will live on.
Overall, Kearney believes this is a great time to sell a business in large part due to the opportunity it presents new buyers. People have been at home for months now and are reconsidering their lifestyle, with many turning to entrepreneurship. Those buyers need time to figure out how to adapt and learn what works. Doing so during a slower period provides a chance to draw out a marketing plan and test different strategies, all while having minimal consequences on profits. Then, in 6-9 months when things hopefully return to normal, the business will be in a great position to thrive.
Advice for Other Business Owners
Kearney advises owners facing similar adversity to take this time to scrutinize their business. Organization and reorganization are the keys to surviving, she says, and encourages owners to review costs and see what changes can be made to make the business more profitable. This will provide a buffer to operate until the pandemic subsides. “The changes you make are meant to act as a Band-Aid, not a long-term solution,” said Kearney.
When it comes to selling, Kearney advises owners to be prepared to address concerns regarding profitability during the pandemic, something that came up often when speaking with inquiring buyers. This is especially true as Kearney’s payroll costs are high, as she offers her employees benefits and pays above minimum wage.
While COVID-19 added a final hurdle to cap her 21 years of success, Kearney’s ability to adapt in a time of uncertainty has put her 18 months away from retirement – with her and her husband’s sails set on the idyllic Borgotaro, Italy. She will spend her days swimming in the Riviera, eating delicious food and drinking fine wine as Pacific Fine Foods begins a new journey under the guide of familiar faces.