Introduction
In the fast-paced, rapidly-growing food and beverage industry, businesses often find themselves in a mode and mindset of continuous expansion. With increasing demand comes logistical complexities, and many businesses face the need to explore relocation or expansion beyond the familiar boundaries of their original operational bases. Understanding potential hurdles and financial impacts from facility modernization and/or retrofitting to acquire necessary permits is crucial to navigating this terrain.
Making sound financial decisions that support current and future growth initiatives is made possible through proactive feasibility analyses. The data revealed in these analyses is indispensable and enables businesses to find best-fit facilities, ensure optimal usage of existing spaces, secure significant tax and utility incentives/benefits, and devise a superior overall expansion strategy.
Client Scenario
Our client, a leading manufacturer of authentic Mexican foods, initially aimed to support their growing business by expanding their footprint within Southern California. However, this proved to be a significant challenge due to the scarcity of facilities that met stringent certification requirements from regional regulatory authorities.
Our client had been in the same facility for more than 30 years. While it was no longer large enough to support their growing product lines, they struggled to find locations that would cater to their needs and Los Angeles County’s requirements without cost-prohibitive renovations.
Challenges
A lack of move-in ready, food-grade facilities within Los Angeles County
Facilities that were available would require extensive costs to bring up to code
Stringent requirements and deadlines imposed by regulatory authorities
Required analysis of added freight/transportation costs and impact on current inbound/outbound deliveries
Necessity to balance employee considerations such as cost of living and commute times
Need for proactive planning to ensure business continuity and future growth
Solution
Our team at DEODATE conducted a thorough feasibility analysis for our client that not only addressed whether an expansion into LA County would be possible, we were also able to identify additional geographies that would welcome a move by our client into their area. Given the regulatory landscape, multi-factor present and future cost implications, and available facilities, we conducted an extensive feasibility analysis of potential markets that could cater to our client's needs without compromising business continuity.
Through this analysis, we vetted four markets that our client had previously considered but not thoroughly assessed. Each provided business-friendly environments, lower resistance from local authorities, and access to a workforce compatible with our client's requirements. By initiating contact with these cities, our team was also able to streamline the permit acquisition process and mitigate potential future hurdles.
In addition to location scouting, we performed a detailed benchmarking analysis of the client's existing facility to understand if it would support their future needs. This analysis identified ways for our client to maximize storage in their current space which provided valuable information for accurately determining how much additional square footage was needed to support their growth.
Outcome
Through a proactive approach and data-driven strategies, our client can now evaluate their expansion plans with newfound clarity. They understood the importance of early benchmarking and the need to prepare for potential regulatory changes. The idea of relocating or expanding no longer seemed a daunting task, nor one that would be made with uncertainty or unnecessary risk to their business.
Our client is now able to make a well-calculated, financially-sound move that promises sustained growth of a successful product line and an equally growing customer base.
The reality for leading food industry companies is clear: the inventory of food-grade, regulatory-compliant facilities is scarce. It can take 6-8 months just for permit applications and issuance, or to receive a response from city governments. Consequently, we recommend that businesses begin the process of leveraging DEODATE to conduct feasibility studies well ahead of an expansion or relocation.
DEODATE has a long history of providing a greater depth of research than is typically offered by traditional brokerages. Specifically in the food and beverage space. Visit our dedicated Food Grade Industrial page for more information here.
Understanding your market, the ins and outs of available facilities, workforce trends, and local government regulations and tax laws is not a luxury; it's a prerequisite to ensuring long-term growth and keeping productivity and efficiency from grinding to a halt.
Be proactive. Let DEODATE help you plan ahead for your next expansion or relocation initiative with a feasibility analysis customized for your unique needs.